Trusts are a way to protect assets from probate and may be used in estate planning. A common type of trust is a living trust, where assets are legally protected while the owners are alive. Assets may be put in a trust for a child who can access them only after reaching a certain age. Trusts may be revocable or irrevocable.
When you inherit property, it is inherited at its current market value. An estate will usually pay any federal estate or state taxes owed on inherited property. It may also be beneficial to leave it in the trust.
When you're married it's important to understand who owns what and how property is divided up. Understanding the way assets are owned is even more important if you've got a prenuptial agreement. If you later get a divorce your prenuptial agreement will determine how the court divides assets.
Designating children as beneficiaries to brokerage and bank accounts can lead to difficulties. Minor children can't inherit cash. You need to have the cash and financial assets in a trust with a trustee (and backup trustee) named until they become of legal age, or until you feel they are old enough to manage these resources appropriately. Leaving real estate to children can be tricky. It's expensive to own and maintain -- and they may not have enough income to keep the property going and they may not be living anywhere near the actual property.
When your spouse dies with credit card debt, is it your responsibility to pay it off? It depends on whether the person who died had an estate with money to pay off the credit cards. If the deceased did not have an estate to pay off the debt it may fall to the spouse, depending on whose name was on the credit cards.
When you lose your spouse and your spouse did not have a will it may make transferring assets such as a home confusing. Estates without a will have to go through probate, which can take some time. Learn how to clear up the ownership of a home and provide your children with clear legal ownership if something should happen to you.
When you put a property in a revocable trust, you also need to be sure the title insurance policy coverage is changed. Title insurance assures the lender that you own the home free and clear, with no liens on it. When a home buyer sells the property, the subsequent buyer should buy his or her own title insurance.