RE Q&A: Revocable Trusts, Aging Parents, New Condos
Older adults are buying a condo in a 55-plus community. Their kids want to know what a revocable trust is – and whether it’s a good idea.
FORT LAUDERDALE, Fla. – Question: Our aging parents are buying a condo in an over-55 community. Someone recommended using a revocable trust for them. What is this, and is it a good idea? – Laura
Answer: A revocable or “living” trust can be an excellent way for your parents to own their new home. A trust is a contract where someone, the “grantor,” in this case your parents, transfers “legal” ownership to one or more “trustees” who are tasked to manage the property to benefit the “beneficiaries” who get to enjoy the property. Because the trust is revocable, the grantor can change the rules of the trust and name alternate trustees and beneficiaries.
Their revocable trust will serve several purposes. Its primary purpose is to control the disposition of property after they pass away. It is often used as an alternative to a will, and the property in the trust will not have to go through probate administration in the courts.
Trusts are more private because the terms of their estate plan are in a private trust agreement and do not usually need to be filed with the courts. The trust also allows a successor trustee to be appointed who can manage your parent’s financial affairs should they become incapacitated. This may avoid a guardianship proceeding at the courthouse.
A properly drafted revocable trust can save you and your family considerable time and money.
In the revocable trust you are considering, your parents would be the grantors who create the trust and the trustees who control the property for activities like signing a mortgage or working with contractors for needed repairs. In practical effect, the trustees act like the managers of the property.
Your parents would also be the initial beneficiaries and enjoy the property’s use. A significant benefit is that when a beneficiary (or a trustee) passes away, no court intervention or probate proceeding is needed to transfer the property to either the remaining owners or the heirs.
Because a revocable trust is a common estate planning tool, virtually all community associations are OK with properties being titled this way. To be on the safe side, you should contact the manager of this community to confirm this will not present an issue.
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