By Elizabeth A. Caruso, Esq.
Myth or Fact? “I do not need to put my house into a trust because I have a power of attorney.”
This is a Myth!
Having a valid power of attorney in place is a great to start to having a comprehensive estate plan, but it will come up short for some real estate transactions. Keep reading to find out why conveying your home to a trust is a much better option.
With regard to selling your home, a power of attorney can be an effective document if you are incapacitated, if, and only if, your named attorney-in-fact has your original signed power of attorney document. In order to sell real estate under a power of attorney, the original power of attorney document must be recorded with the Registry of Deeds. If the original is not in the possession of the attorney-in-fact at the time of the signing of the deed, the deed cannot be signed. In this instance, the need to petition for a conservatorship at the probate court would be triggered, adding significant time and expense to the sale of the real estate.
An additional issue arises if you pass away. This is because a power of attorney is only valid during your life; the document dies with you. As such, if you were only relying on a power of attorney for loved ones to help you with your assets, those assets are now potentially subject to probate. This adds even more time and expense to the sale of real estate than a conservatorship would.
This can all be avoided if the real estate is owned by a trust. If you put your home into a trust, you can be the trustee – who manages the trust – and the beneficiary, who benefits from the trust. If you as trustee become incapacitated, the successor trustee that you have named in the trust document can step into your place with the need for court intervention. If the real estate in the trust needs to be sold, the successor trustee has the authority to execute all sale documents. Putting your house into a trust has the bonus effect of avoiding probate if you pass away.
Not all trusts are created equal. There are many options for creating a trust, including revocability and distribution structure. An elder law attorney can walk you through these options and help you create a comprehensive estate plan that makes your incapacity or death less burdensome for your loved ones.
About the Author: Elizabeth A. Caruso, Esq. is an attorney at Legacy Legal Planning, LLC, in Norwell. She has been practicing estate planning, probate, and elder law on the South Shore for more than a decade. If this article has sparked questions for you, please feel free to reach out via phone 781-971-5900 or email elizabeth@legacylegalplanning.com to schedule a time to discuss your unique situation.
