Ask Phyllis: a blog series of frequently asked real estate questions.
What Is the Difference Between a Trust Sale and a Probate Sale?
Dear Phyllis,
My husband and I own our home. Recently, our accountant recommended that we place our home in a living trust. I have heard the terms “trust sale” and “probate sale”. What is the difference? Also, what are the benefits of creating a trust? Jim
Dear Jim,
This is a common question I receive from homeowners. Many people think that a trust sale and a probate sale are the same. However, they follow very different paths.
A trust sale occurs when a homeowner places a property in a living trust before passing away. Afterward, the successor trustee manages the property in accordance with the trust documents. In most cases, the trustee can sell the home without court supervision. As a result, trust sales often move much faster.
A probate sale, on the other hand, occurs when a homeowner dies without a trust. In that case, the probate court appoints an executor or administrator to manage the estate.
Unfortunately, probate can take months or even years. In addition, court filings, attorney fees, and legal requirements often increase the cost of settling an estate.
So, why should you consider creating a trust?
First, a trust helps your family avoid probate. Consequently, your heirs can settle your estate more quickly. Second, a trust protects your privacy. Probate records become public. Anyone can access information about the estate. In contrast, a trust keeps your financial affairs private. Third, a trust can reduce family conflict. Clear instructions leave less room for confusion. As a result, family members can focus on supporting one another instead of resolving disputes.
Finally, a trust can simplify the sale of real estate. The trustee can often prepare, market, and sell the property without waiting for court approval.
Many homeowners believe that only wealthy families need trusts. However, that is a common misconception. If you own a home, a trust may provide significant benefits.
Therefore, I encourage homeowners to meet with an estate planning attorney. A simple conversation today could save your family time, money, and unnecessary stress in the future.
