Should your parents' house be in a trust?
by Caitlyn Driehorst
Published: June 4, 2025
Your mom may keep an agenda of things to discuss with you: Lori in her cards group just got scammed on Facebook, “Blue Bloods” changed streamers and now Dad can’t find it on the Roku, and just wondering and not wanting to pry, but – babies? More babies?
One thing that may be on your agenda to discuss with your parents: should their primary residence be in a trust?
Read on to learn why a trust could be a helpful part of their estate planning — and one sure-thing recommendation we’d make to anyone involved in their parents’ lives.
Before we jump in…
Register for our upcoming webinar, “Difficult Financial Conversations with Aging Parents”
Want to learn more about what you should discuss with your parents about their end-of-life plans – and how to frame those challenging questions? We cover:
Tactical strategies to bring up these important questions, even with the squirmiest and most avoidant of parents
An overview of the personal admin associated with loss of loved one
Key documents you want your parents to have on hand
All of our webinars feature BCG-alum slide decks, helpful PDF handouts and recordings sent to you via email after the session.
Register to join our session on Tuesday, June 17, 2025, at 9:00 Pacific / 12:00 noon Eastern.
and now, back to our blog post…
What’s the most-common reason to want your parents’ home to be in a trust?
When someone passes, their financial assets can transfer relatively seamlessly via beneficiary designations on each account. A loved one can call up the financial institution, fulfill some paperwork, and everything can transfer over.
However, physical assets – a home, a car, belongings, collectibles – transfer ownership after death via probate court. The court looks at the total value of the estate, settles with creditors and directs the assets either according to an individual’s will, if available, or by the rules of the state.
Probate courts are often backed up, such that it can take months or even years to fully settle an estate. Probate is also expensive: commonly 2% - 5% of the estate. And note that while a will provides instructions to direct probate, it alone does not allow an estate to avoid probate.
Therefore, since a primary dwelling is not only something you’d want to settle quickly (since humans live there, or may want to sell the home) but also can often be the single-largest asset of many estates, it may be desirable for the house to avoid probate and instead transfer simply, similar to how a financial asset can transfer with an account beneficiary designation. Putting the ownership of a home into a trust is one way to accomplish that goal.
What are the costs or downsides of having a home in a trust?
The biggest downside is a decent chunk of administrative fuss:
It’s fussy to set up… Your parents will probably want to work with an attorney to select and establish a trust that meets their objectives, and this takes time and can cost several thousand dollars.
… and fussy to implement… You can’t just open the trust; you need to place the deed for the home into the trust.
… and it stays fussy over time: Refinancing and selling a home that’s within a trust can also require extra work.
That said, while there are some fees and fuss associated with establishing a trust, there’s also significant fees and fuss associated with managing an estate through probate. Fees to open a trust are typically a few hundred to a few thousand dollars; compare that to 2% - 5% of your parents’ home value. And, you’ll have to fuss around with a deed transfer in either event.
So — pick your pain.
Is there an easier path to the same objective of easy transfer upon death, besides opening and funding a trust?
If your parents are New Balance-and-knee-sock normies who own their house jointly and have the simple, common goal of having the home pass wholly and quickly to the living spouse after the death of the other – no need to fear. The “right of survivorship” will ensure that the home will pass to the other name on the deed, bypassing probate. After the first spouse passes, the second spouse will then want to update their estate plan, which may include a trust at that point.
While this arrangement is straightforward, note that it only protects that common scenario. Should your parents pass together (e.g., in the same unfortunate accident), the home would go to probate.
Many states have adopted “transfer upon death” deed rules, which acts like an account beneficiary designation on a financial account and allow a home to bypass probate. However, as a recent article in the Wall Street Journal elaborates, these are blunt instruments, and details to avoid inadvertent consequences are still being ironed out. While these rules were intended to favor the DIY household with an inexpensive and simple tool, they’re still best implemented under the guidance of an experienced attorney.
So we think a trust could help simplify our parents’ final affairs. What’s next?
It’s not enough to believe a trust could be helpful; you’ll need to know which type of a trust best-suits your parents’ objectives. This is where an experienced attorney can be helpful, since there are an entire library of different types of trusts: revokable or irrevocable, qualified personal residential trusts, spousal remainder trusts, charitable remainder trusts, AB trusts, spendthrift trusts, special needs trusts…
Specific flavors of trusts can account for other objectives in addition to avoiding probate, such as:
Allowing for a second-spouse or later-in-life partner to remain in a home while providing for its value to pass later to children of a first marriage
Allowing for minor children to inherit within the guardianship of a trustee (if you have any much-younger siblings)
Providing for adult children with disabilities, such that an inheritance doesn’t harm their eligibility for government services
Placing constraints on the inheritance for adult children (e.g., if one sibling has substance abuse disorder)
Minimizing estate taxes (note that while the 2025 federal exemption is quite high – $13.99M – some states may have much lower thresholds. For example, in Oregon, estate taxes apply starting at $1,000,000.)
Ensuring Medicaid eligibility for long-term care by cordoning off certain assets
Second, once the trust is opened, make sure you stay on top of your parents to transfer their deed and other assets into the trust, as determined with their attorney. This step is – as mentioned earlier – fussy, and easily procrastinated.
So what should you do? What should your parents do?
As financial advisors, we have to follow many compliance rules: for example, we’re really supposed to avoid blanket statements. (After all, nothing is more informative or useful than paragraphs like “the sky could be described as a blue or bluish color; however, individuals’ perceptions can vary and this is not intended as a weather report; please consult a meterologist.”)
But I’ll risk life-and-limb to make a definitive recommendation: if you’re involved in your parents’ lives, you should attempt conversations about their end-of-life while they’re in good health (rather than postponing them to when these circumstances are all-too real) and you should encourage your parents to consult with an attorney for a comprehensive end-of-life plan.
“Hey, I read this blog post and I was wondering – should your home be in a trust?” could be a low-emotion wedge to open up a bigger conversation, or to prompt them to consult with an estate attorney who can help them prepare a comprehensive plan. Fancy-sounding real-estate decisions are less charged than other death-related topics, and it can be a safer, more tactical place to start a conversation that can feel overwhelming.
Another great way to bring up end-of-life organization with your parents? Get your own affairs in order, and share that experience with them. You don’t have to do it alone. At RightWise, we help clients not only with their investment management, but also with their full financial lives: everything from cash flow and budgeting, to debt management, insurance selection and organization for end-of-life. Our planning and education can complement legal work with an attorney, or, if your matters are simple, we can point you to screened DIY platforms. If you’re curious what this looks like, set up time with one of our advisors to chat about how we work with clients.
Interested in learning more about what you should know about your parents’ affairs – and how you can have these conversations in the first place?
Join us for the next session of our webinar, “Difficult Financial Conversations with Aging Parents.” You’ll leave the session with a checklist of questions to ask – and some tools to get the ball rolling.
“Of course, I’m proud of all our webinars, but this one is especially close to my heart because it’s not only thoroughly useful – I love our handouts – but we’ve worked so hard to put kindness into every slide. I hope you can feel how important this material is to us, on a personal level.”
-Hannah Farrow, financial advisor
We are not attorneys and this article is intended to be educational and informative, not legal advice. As we like to say, “This is where your research should begin, not end.”
Author: Caitlyn Driehorst
Date Published: 6/3/2025
