Protect Your Home and Your Future: The Surprising Benefits of a Grantor Trust

The Red Wagon Estate Planning & Elder Law Show

Putting your house in a trust has many benefits—from financial savings to peace of mind. You can continue to live in the home and control the property. You can avoid the capital gains tax, the 2% transfer tax, and the inheritance tax while still qualifying for the homestead exemption and the Clean and Green tax benefit. And, of course, a trust protects your assets to pass the wealth to your loved ones.

In this discussion, Jeff Bellomo—an experienced estate planning and elder law attorney with a master's degree in taxation—explains planning techniques for estates with a net worth in the $300,000 to $5 million range.

WHAT YOU NEED TO KNOW

(00:00) Episode introduction.

(02:40) A trust is a legal contract between three parties. The grantor creates the trust, the trustee controls it, and the beneficiary receives it.

(06:56) A grantor can also serve as the trustee and live in the home, much like a beneficiary. The grantor is taxed at individual income tax rates.

(08:01) As a trustee, a grantor can sell the home, buy another home, and avoid the capital gains tax if they live in the home two out of five years as their primary residence.

(08:53) If the trust provides only for lineal descendants or siblings, there will be no transfer tax. Use an experienced estate planner to still qualify for the homestead exemption.

(12:44) A grantor trust will not jeopardize the Clean and Green tax benefit.

(13:00) If there is a current mortgage on the primary residence, it can be added to the trust. Be sure to continue to pay on time.

(16:17) It's wise to create the trust when a person or a couple is younger so that the Medicaid five-year lookback period does not pose a problem.

(20:04) A trust allows the family to protect accumulated equity, access funds to enhance the grantor’s life, and keep the grantor in the home.

(21:35) Ultimately, a trust provides flexibility and peace of mind. The family knows that the grantor(s) and the house are protected.

ABOUT BELLOMO & ASSOCIATES

Jeffrey R. Bellomo, the founder of Bellomo & Associates, is a licensed and certified elder law attorney with a master’s degree in taxation and a certificate in estate planning. He explains complex legal and financial topics in easy-to-understand language.

Bellomo & Associates is committed to providing education so that what happened to the Bellomo family doesn’t happen to your family. We conduct free workshops on estate planning, crisis planning, Medicaid planning, special needs planning, probate administration, and trust administration. Visit our website (https://bellomoassociates.com/) to learn more.

LINKS AND RESOURCES MENTIONED

Bellomo & Associates workshops:https://bellomoassociates.com/workshops/

• Life Care Planning
• The Three Secrets of Estate Planning
• Nuts & Bolts of Medicaid

For more information, call us at [phone].

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WAYS TO WORK WITH JEFFREY BELLOMO

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