Should I put my parent's home in trust?

A fellow caregiver asked...

Is it wise to put a widowed elderly parent's home in trust?

Expert Answer

Liza Hanks is the founder and owner of FamilyWorks Estate Planning, a law firm with offices in Campbell and Los Altos, California, and the author of The Busy Family's Guide to Estate Planning (Nolo, 2007).

It depends.

Sorry--that doesn't sound like an answer. But there are a couple of issues to consider before you can make the best decision.

First, if either of your parents are ill or just need help managing their finances, then a trust can be an efficient way to manage all of their assets--and you should consider doing it.

Second, if managing the assets isn't a concern, the other main reason people put assets into a living trust is to avoid probate, which is the legal process by which an estate is settled.

There's nothing inherently evil about probate, but it can be slow and expensive, depending on where your parents live. For families with a simple estate plan--for example, the kids will get all the property in equal shares--and who have no creditor problems or simmering family feuds, then the probate process is usually overkill.

If everyone involved pretty much agrees on what should happen, a judge in a probate court will not have much to do that can be helpful.

If your parent lives in a state in which probate is slow and expensive, such as California, then a living trust is probably a good idea. But if your parent lives in a state in which the probate process is fairly efficient and inexpensive, such as Florida or New Mexico, than a will can be a perfectly adequate way to deal with distributing property as the main component of an estate plan.