Why Consider Deeding a Residence to a Trust?
A Massachusetts Deed of Residence is a real property deed that conveys a residence into a trust.
In addition to transferring a primary residence to a trust for ease of later change of ownership, and to eliminate probate or transfer of that asset, a deed of residence is important in estate planning, as it may shield the value of a residence from Massachusetts estate taxes upon the death of a residence owner.
Currently, Massachusetts provides an estate tax exemption of $1,000,000, meaning that an individual with an estate of less than this amount will not be obligated to pay Massachusetts estate taxes. However, if a couple owns assets (including real estate) valued in excess of $1,000,000, the exemption is not available and the surviving spouse may be responsible for paying significant taxes upon the passing of the other spouse.
Transferring Assets into an Irrevocable Trust May Minimize Estate Taxes.
In Massachusetts, estate taxes could possibly be minimized by transferring property into an irrevocable trust. By doing so, ownership of property is transferred to a trust, and a surviving spouse can acquire ownership to those assets without delay or probate upon the death of the first spouse. Legally, the residence belongs to the trust and not the surviving spouse, effectively making it a non-estate asset if the transaction occurred five years or more before the decease of the transferor, resulting in significant tax minimization.
How Do I Transfer a Residence or Personal Property into a Living Trust in Massachusetts?
To transfer property (such as a primary residence) into a living trust, an individual must execute a deed or, in the case of personal property, execute a bill of sale to effect a legal transfer of ownership. Experienced Jamaica Plain estate plan attorney Bob Grodberg handles all legal requirements for transferring such property into a trust, including (but not limited to):
- Drafting a deed or personal property assignment
- Recording a deed
- Handling ‘due-on-sale’ clauses
Properly done, such transfers may minimize or avoid transfer and estate taxes