When you have already paid off your home, and are not considering selling it for the remainder of your life, you may be wondering whether there are any advantages of placing your home into a trust. If your plan is to pass your home on to family members or other potential beneficiaries, what is called a living trust may be seriously worth considering. In Massachusetts, this type of estate planning strategy can provide some benefits, and doesn’t mean you have to make an absolute choice between a trust or a will for all your assets,
A revocable living trust will allow you to make any changes, or even reverse it if there are changes in your circumstances, while an irrevocable living trust may help avoid taxes and your assets being considered when eligibility is assessed for Medicaid. This article will help explain to you what a living trust is, the different types, and the comparison between a trust and a traditional will.
A living trust explained
A living trust is a legal agreement created while you are still alive when some or most of your main assets, including your home, are put into a trust that is managed in accordance with your instructions. While you are sufficiently coherent to still manage your affairs you can appoint yourself as the trustee which gives you full control. However, when you feel you are no longer fully in control of your life or after your passing, a successor trustee will take over and will follow your wishes, which could include distributing your property to your selected beneficiaries. For a married couple, a joint living trust could be created so that your assets can be managed together.
The two main types of living trusts
Living trusts fall into two main categories, which are revocable and irrevocable trusts. A revocable trust offers the freedom to change the terms or dissolve the trust in its entirety at any point in time. This type of flexibility allows you to maintain control over your property while you are still alive. However, when you retain ownership, your assets are still considered to be part of your estate for taxation purposes and may be vulnerable to creditors.
By contrast, it is not possible to alter an irrevocable trust or cancel it once it has been set up. You will be transferring ownership of your home permanently to the trust. Even though it limits your control, it does provide some advantages which do not come with a revocable trust. The assets placed into an irrevocable trust are better protected from creditors and they will not be used to assess your eligibility when you file an application for programs like Medicaid.
Should trusts be used instead of wills?
One of the key reasons for an individual choosing to place their home in a trust rather than put it in a will is to avoid probate. In Massachusetts, probate is the legal process of validating a will and distributing its assets. This process often takes several months, particularly if the will is contested by potential and named beneficiaries. Trusts, whether revocable or irrevocable, allow for the faster distribution of assets as they completely avoid probate. This can be a relief for beneficiaries as they will know in advance of how they will benefit from the distribution of trust assets.
However, it is still important to have a will as this can be responsible for any assets that have not been included in the trust and lets you appoint a guardian for minor children which is something a trust is unable to do. If you decide not to draft a will, any property you have that is not held in the trust may be divided in accordance with Massachusetts intestacy laws, which might not suit your wishes.
Massachusetts has implemented a Uniform Probate Code, which is able to streamline probate for smaller estates. So if you do not have many assets, or you don’t include real estate like a home, it might not be necessary to place these assets into a trust.
Estate taxes and trusts
Estate taxes and trustsPutting your home in a trust does not mean you will completely avoid estate taxes. Both federal and state taxes may apply but this will depend on your estate’s total value. As of 2025, federal estate taxes only apply to estates that are more than $13.99 million for an individual or $27.98 million for a married couple. Massachusetts also imposes estate taxes on any estates which are worth more than $2 million. These thresholds remain relevant whether the property is in a trust or not.
Which is the best type of trust for your home?
If you have a revocable trust, you keep complete control over the assets while you are still alive, but those assets are still part of your taxable estate and could count against you when determining your eligibility for public benefits. An irrevocable trust, even though it is more restrictive, may offer more protection from creditors and may assist you with Medicaid planning because the assets are technically no longer yours.
So should you transfer your home into a trust?
Whether you decide to keep your property in your name or place it into a trust depends on your own goals. Having a trust may offer peace of mind, protect your assets, and simplify the inheritance process, but careful thought about your choices is required. The rules involving estate taxes, probate, and the distribution of assets are not always easy to understand so help from an expert is required.
To ensure you make the best choice that suits your situation, it’s a good initiative to discuss your situation with a Massachusetts estate planning attorney who can help you assess your options and tailor a plan that suits your specific needs.