Should Your Home or Vacation Home Be in a Trust?
For many families, their home isn’t just an asset — it’s their largest one.
And if you own a vacation home, rental property, or property in multiple states, the stakes are even higher.
One of the most common questions we hear at Allwealth Planning is:
“Should we put our house in a trust?”
The short answer:
For many households — especially higher earners, business owners, and multi-property owners — the answer is often yes.
But let’s unpack why.
What Happens If Your Home Is NOT in a Trust?
If your home is titled in your individual name when you pass away, it typically must go through probate.
Probate is:
- A court-supervised legal process
- Public record
- Often slow
- Potentially expensive
In Arizona, probate can take months — sometimes longer depending on complexity.
If you own property in another state (a cabin in Colorado, a condo in California, a beach home in Florida), your family may face ancillary probate in each state where property is owned.
That means:
- Multiple courts
- Multiple attorneys
- Multiple timelines
That’s unnecessary stress during an already emotional time.
What Does a Revocable Living Trust Do?
A revocable living trust is a legal entity that holds title to your assets — including real estate — while you’re alive.
You remain in full control.
Nothing changes operationally.
But legally, the trust owns the property — not you individually.
That allows:
- Probate Avoidance
When structured properly, real estate inside a trust passes without court involvement.
- Incapacity Planning
If you become incapacitated, your successor trustee can manage, refinance, or sell the property without needing court guardianship proceedings.
This is one of the most overlooked benefits.
Estate planning is not just about death.
It’s about control while you’re alive.
- Privacy
Trust administration is private.
Probate is public.
For high-income households, business owners, and professionals, privacy matters.
Vacation Homes & Multi-State Properties: Why This Matters Even More
If you own property in multiple states, placing real estate into a trust often shifts from “nice to have” to “strongly recommended.”
Without a trust, your family could deal with:
- Arizona probate for your primary residence
- Separate probate in the state where your vacation home is located
That means additional time, cost, and complexity.
For clients with:
- Cabins
- Short-term rentals
- Snowbird homes
- Investment properties
A trust is often the cleaner, more strategic structure.
What If You Want to Keep the Vacation Home in the Family?
Many families say:
“We want the cabin to stay in the family.”
But they don’t define:
- Who pays maintenance?
- Who schedules usage?
- What happens if one sibling wants out?
- What if someone can’t afford their share?
A properly structured trust can:
- Define buyout provisions
- Set maintenance funding rules
- Create governance guidelines
- Prevent forced sales
Without structure, vacation homes can quickly become sources of conflict.
Does Putting Your Home in a Trust Change Taxes?
For a revocable living trust:
No.
- Your capital gains exclusion remains intact.
- Your mortgage interest deduction remains intact.
- Your property tax treatment remains intact.
- There is no separate tax return while you’re alive.
A revocable trust is not a tax strategy.
It’s a legal and administrative strategy.
When Might You Not Need a Trust?
There are exceptions.
You may not need to place your home in a trust if:
- Your estate is small enough to qualify for simplified transfer procedures.
- You are comfortable with probate.
- Your property structure already achieves your intended outcome.
- You have no multi-state exposure.
But for many building-wealth households — especially those with multiple income streams and real estate — a trust often adds clarity and protection.
The Real Question Isn’t “Should I?”
It’s:
- Do I want court involvement?
- Do I want privacy?
- What happens if I become incapacitated?
- Will my family face multi-state probate?
- Are we setting our heirs up for simplicity — or stress?
At Allwealth Planning, estate planning isn’t a document discussion.
It’s a control discussion.
Your home is more than where you live.
It’s part of your legacy.
About the Author:
Eric Bottolfsen is a co-founder and financial planner at Allwealth Planning, an independent fiduciary firm focused on comprehensive planning for high-income professionals, business owners, and real estate investors. Eric works extensively with clients who own both short-term and long-term rental properties and helps them coordinate cash flow, tax strategy, insurance, entity structure, and estate planning into a single, intentional plan. He also personally owns long-term and short-term rental properties, giving him firsthand experience navigating the planning decisions real estate owners face beyond the purchase.
eric@allwealthplanning.com | 844-297-5266 | 1430 E Missouri Ave. Suite B-111 Phoenix AZ, 85014
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