What are the advantages of placing the house on a trust for my child during a divorce?

Asked about 2 years ago - Miami, FL

I am divorcing my wife, I will probably put the house on a trust for my child. Can someone explain to me the benefits? How does a trust works. I know very little about trusts.
Please help.

Attorney answers (4)

  1. Stephen Wills Murphy

    Contributor Level 9

    4

    Lawyers agree

    1

    Answered . I will start by explaining the basic elements of a trust. If property is owned by the trust, then the Trustee (one individual or entity) manages the property for the benefit of one or more Beneficiaries (other individuals or entities). You can determine the terms of the trust -- for example, when the house will be sold, who can live in it, etc.

    There are various benefits to placing property into a trust. For example, in the case of a child, that child cannot legally own property. If anything were to happen to you and the property passed directly to your child, then the court would have to appoint a guardian to oversee the property -- that is expensive and cumbersome. Placing the property in trust avoids that.

    The two basic types of trusts are "revocable" and "irrevocable." If it is irrevocable, then the terms of the trust cannot be amended by you. If it is revocable, then you can still control the property.

    But there are disadvantages. In particular, under most circumstances, a trust cannot take advantage of the capital gains exemption that an individual has -- have a look at this blog post:
    http://nationalwillrepository.com/2012/08/disad...

    A trust can also be a tool for managing complex assets and gifts: put certain pieces of property into a trust, and when you pass away, there is no need for probate -- the trust already owns it, and it determines how the property will be managed in the future. See this blog post for more information: http://nationalwillrepository.com/2012/08/trust...

    But the trust is cumbersome. You should think about the benefits before placing the property into a trust. A lawyer might help you consider the particular benefits in the context of your divorce.

    I am licensed to practice law in Virginia. Please note that this answer does not constitute legal advice, and... more
  2. James P. Frederick

    Contributor Level 20

    4

    Lawyers agree

    1

    Answered . I agree with Attorney Murphy, in general, but I would disagree that a trust is cumbersome. Most trusts are very easy to manage, and the people you deal with are very familiar with them and how to handle them. You do not say how old your child is, but if he/she is a minor, then a trust is absolutely the best planning tool to take care of his/her inheritance. It provides for flexible distribution to the child, protection from creditors and your ex getting control of the assets, and probate avoidance. It is a private arrangement between you and your trustee and the beneficiaries. No one else needs to know who is getting what, or when they are getting it.

    I have material on my website about the use of trusts, which might be of general interest to you. But you really need to consult with a Florida trust attorney to assist you. This is definitely not a do-it-yourself project.

    Best of luck to you as you deal with these challenges!

    James Frederick

    *** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and... more
  3. Adam Troy Rauman

    Contributor Level 14

    2

    Lawyers agree

    Answered . One of the biggest advantages of placing your home or any asset in a Trust, is the Trust will avoid probate. If you child is a minor when he/she inherits the home, the trustee can manage the property (pay taxes, maintain the property, ect.) until your child is able to do so on their own. Also, should the property need to be sold, the trustee will handle the sale and place the proceeds in the Trust until you child reaches a predetermined age.

    Whenever a minor is involved, it is best that they inherit assets via a trust. Most people at 25, let alone 18, are not mentally or financially knowledgeable enough to handle a large ($50,000 or more) lump sum of money. Since you are having a Trust drafted, I also recommend that any and all potential inheritance, including life insurance and retirement accounts, be held in trust for the benefit of the child.

    If you would like additional assistance, please call my office.

    This answer is provided for informational purposes only, does not constitute legal advice, and does not create an... more
  4. Joseph Franklin Pippen Jr.

    Pro

    Contributor Level 20

    Answered . Your question asks about placing the house in a trust "during" the divorce.
    You would not be able to place the Florida homestead in a trust without
    a pre or post marital agreement or a marital settlement agreement.

    The answer given does not imply that an attorney-client relationship has been established and your best course of... more

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 

Ask now

22,757 answers this week

2,628 attorneys answering

Ask a Lawyer

Get answers from top-rated lawyers.

  • It's FREE
  • It's easy
  • It's anonymous

22,757 answers this week

2,628 attorneys answering