A revocable living trust is one of the most important and useful tools in the estate planning process. It allows you to create instructions for what happens to assets owned by the trust while you are alive and well, in the event you become disabled and after you pass away.
During your lifetime, you are free to add or sell new properties and assets to the trust at any time.
Keep in mind that once you pass away, the trust becomes irrevocable.
While you are alive, if you have appointed yourself as the trustee of the trust, selling a piece of real estate in the trust is virtually the same as if the title of the property was still in your name. If you become disabled or incapacitated, whoever you appoint as the successor trustee can sell the property in the same manner. In fact, the process of selling real estate — finding a buyer, settling on a price, passing inspection, etc., — remains the same as if you were selling property in your name, and not in a trust.
Still subject to capital gains tax
When you create a revocable trust, and place real estate property in that trust, you are still subject to a capital gains tax.
The reason this happens is because even though the trust owns legal title to the property, for tax purposes, the trust grantor is still considered the owner during his or her lifetime.
Of course, if you meet the threshold for capital gains exclusion ($250,000 for single filers, $500,00 for joint filers), you can still claim the exclusion regardless of whether your real estate is in a revocable trust. To claim the capital gains exclusion, you must also have resided in your home for a minimum of two out of the five years before the date of sale, and you must have lived in the house as your main home for at least two out of the previous five years.
Although the process for selling property owned in a revocable trust is not significantly different than selling property owned in your individual name, selling or buying one of many people’s largest asset can be a complex process worthy of skilled legal support to ensure your investment is protected.
An experienced and knowledgeable Florida estate planning attorney can help protect your interests and those of your beneficiaries.
Contact a knowledgeable trust attorney in Florida
The Law Offices of Hoyt & Bryan, LLC, provides hands-on estate planning guidance for a wide range of issues including wills, trusts, estates, and elder law matters. For more information on our services, or to speak with an experienced trusts lawyer, call (407) 977-8080 or contact us online. To better serve our clients, we have office locations in Oviedo and Altamonte.