Among the many different types of assets you might pass on to beneficiaries, your home is one that merits special consideration. Unlike most financial assets, houses can’t be easily divided, and they come with built-in expenses for taxes and maintenance. They may also carry deep memories and emotions, especially if your family has owned the home for many years. “The nature of a house can make it tricky to pass on,” says Brendan Payne, an Advanced Planner with Fidelity in Colorado.
“In conversations with clients, we start with the practical consideration of whether any of the beneficiaries might actually want to live there,” Payne says, noting that most beneficiaries opt to sell the home during the estate settlement process. From there, Payne outlines the options to transfer a home to beneficiaries, which include through probate (either with or without a will), a revocable trust, and potentially a transfer-on-death (TOD) deed, among other methods.
Benefits of putting your house in a revocable trust
In many cases, especially if the family has already opted for a revocable trust as part of their estate plan, putting the primary home into that trust creates the simplest path for passing it on. “It makes as straightforward a transfer as possible between all the parties,” Payne says.
With a revocable trust, also known as a living trust, the grantor always has the option to change or even terminate the arrangement at any time (i.e., it can be revoked). The trust spells out exactly how and when trust assets should be passed on, but the grantor stays in control of trust assets during their lifetime. This allows the grantor to stay in their home as long as they like and ensures a smooth transfer of the property after their death.
Payne points to 3 more advantages of the revocable trust structure:
- Avoids probate: The cost and length of the legal process a state uses to settle your estate, the process known as probate, can vary depending on where you live or where your property is located. It can often be expensive, take a long time, and make your records publicly accessible. This can greatly delay the time frame if your beneficiaries prefer to sell the home: If the executor of a will needs to sell the home as part of the estate settlement process, they may need to get a court order or other authorization to oversee the sale. This becomes even more important for people who own property in more than one location, since their estate might have to go through probate in multiple states.
- Incapacity planning: A trust can outline how you want your home to be managed during your lifetime if an illness leaves you unable to handle your own affairs.
- Family dynamics: Placing your home in a revocable trust can make it much easier to divide the property among multiple heirs because the trust can clearly specify who should ultimately receive the home or the proceeds from a sale. This can be especially helpful for blended families, since you can direct the trust to allow your second spouse to live in the home for the rest of their life while still ensuring that the property passes to your children after your spouse’s lifetime.
Tax considerations for putting a home in a trust
Because the grantor retains control of the property in a revocable trust, trust assets are included in the grantor's gross estate at the grantor's death and may be subject to estate taxes. Similarly, for income tax purposes, the trust is treated as if it does not exist and all income and deductions appear on the grantor's personal income tax return.
As such, the beneficiary of your home transferred to a trust would receive a step-up in basis—meaning the beneficiary’s cost basis in the home would be stepped up to the fair market value of the property at your date of death. So even if the home had appreciated significantly from the time you bought it, by receiving stepped-up basis, if your heirs sell the house they would only incur tax on any gain over the stepped-up basis amount.
A less likely option would be to place a personal residence in an irrevocable trust. With an irrevocable trust, generally speaking, the grantor permanently relinquishes control of the assets placed in the trust. Therefore, an irrevocable trust can be designed so that appreciation on the trust's assets is not included in the grantor's gross estate, thereby sheltering it from potential estate taxation.
Given the federal gift and estate tax exemption amounts (in 2026, $15 million per individual, with a potential combined exemption of $30 million for married couples), putting a house into an irrevocable trust is rarely the best strategy for most people, explains Payne, and most homeowners are not inclined to relinquish control over the house they are living in. Plus, with an irrevocable trust, beneficiaries do not get a step-up in basis upon the sale of the home.
For homeowners who might benefit from putting their home in an irrevocable trust, one structure they can consider is a qualified personal residence trust (QPRT). With a QPRT, the home is transferred to the trust right away, but it allows the original owner to retain the right to live in the home for the duration of the QPRT term. “A QPRT is a very complex structure,” cautions Payne. “It’s very important to work with a qualified estate attorney who can walk you through all the considerations.”
How to put your home in a trust
Putting your home into a trust generally involves having your estate planning attorney draft a trust document, signing it, and then transferring legal title of the property into the name of the trust. After creating the revocable trust, you execute a new deed that names the trust as the property’s new owner, as well as any necessary related documents, such as a trust certificate and new declaration of homestead. Then you’ll need to file the relevant documents with your local land records office.
A lawyer can help you identify any downsides to putting your real estate in trust which might stem from your specific situation as well as any necessary follow-up, such as updating related insurance policies and condominium documents to reflect the trust’s ownership.
If you’re considering transferring rental property, you may want to consider an additional layer of liability protection. Rental properties can be placed into a limited liability company (LLC), and once the LLC owns the rental property, your estate planning attorney could then transfer your membership interest in the LLC itself to the trust. This structure can preserve liability protection for you as the landlord while still ensuring the property passes according to the terms of your estate plan.
Alternatives to home trusts
A trust is one of the simplest, but far from the only option, for passing on a home. Below are other common methods.
Joint Tenancy: The property automatically goes to the surviving owner(s) when one joint tenant dies, bypassing probate. Where available, a particular kind of joint tenancy, called tenancy by the entirety, is typically used for married couples.
Tenants-in-Common (TIC): Allows one or more owners to have an undivided interest in the property, offering them full access and use. When one owner dies, their share of the property passes through their probate estate, unless the tenancy in common interest is in the name of the owner’s revocable trust. However, TIC may not avoid probate and can result in unanticipated and unwanted ownership arrangements.
For example, assume John and Jane are siblings and TIC on an apartment building. John dies and John’s interest passes through his will to his child, Jason, who is a minor. Now Jane co-owns an apartment building with her minor nephew, which was never John nor Jane’s intention when entering this titling agreement.
Transfer on death (TOD) or beneficiary deed: Some states offer the option of adding a TOD designation on a deed (also known as a beneficiary deed or Lady Bird Deed), which essentially avoids probate by naming a beneficiary for that property. Like a revocable trust, this strategy lets you keep full ownership and control of your home for as long as you’re alive, while designating who will receive it when you pass away. Beneficiaries also get a step-up in basis for tax purposes. A TOD is also typically easier and less expensive to set up than a trust. However, TOD deeds are not an option in every state, and the TOD structure does not allow for incapacity or contingency planning.
Will: You can always choose to pass your home on through your will. While this approach is straightforward, it generally requires the estate to go through probate—a process that can be lengthy, public, and costly. A will also doesn’t provide the same level of control or protection that a trust structure can offer.
The bottom line on home trusts
Putting your home in a revocable trust can help protect your wishes, reduce administrative burdens for your loved ones, and provide clarity in complex family situations. Whatever option you decide to pursue, remember that it's important to consult with a financial professional as well as tax and legal advisors to help ensure it's aligned to your broader wealth goals.