Three Benefits of Using a Family Trust

Glendale House photoIf you’ve never heard of a family trust, it’s something you might want to learn about sooner rather than later. A family trust is a great way to help the members of your family in the future and leave them something to help out when the time comes. Basically, a family trust is a situation in which you, as the settlor, still have some control over your assets while they are progressively transferred more and more fully to your family members. You can have a family trust set up while you’re still living or you may add one to your will to take place when you are no longer living instead. With a family trust, your family members will be able to take ownership of your home and property eventually. There are several other benefits to setting up a family trust, listed below.

Peace of Mind for Your Family

This is usually the first benefit people think of when considering setting up a family trust. When your assets are transferred over time to your family members, they can rest assured knowing they won’t have to worry as much about money or property issues later on in life. This can also help make you feel better about what will happen to your property and funds after your death as well. Knowing that all of your assets will go to your family may make you feel more at ease too.

Protections from Claims by Collectors

Bill collectors, ex-spouses and others may try to collect payments from your assets. However, if your funds and property are a part of a family trust, this will take precedence over any other claims. This means that no one will be able to reach your funds or your property who you don’t want to. You will eventually reach “personal poverty” and become a beneficiary of the family trust while your family members become the legal owners of your assets instead.

Confidential Dealings

When you set up a family trust, this paperwork is not filed publicly. In this way, you can confidentially take care of your assets without having to let anyone in on the situation unless you choose to. Only the lawyer in charge of your paperwork, you, and the appropriate family members will know about the family trust. This is a great option if you want to involve some members of your family but not others, or if you’re trying to protect your assets from ex-spouses or other relatives who may try to lay claim to them.

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What is a Leasehold Mortgage?

When you’re buying or selling a home, it’s important to understand the different types of mortgages you may encounter. They aren’t all the same, and they can get a little difficult to understand if you don’t do a little prior research or consult with a lender. This is usually a type of mortgage that affects commercial properties, but this isn’t always the case. Learn what a leasehold mortgage is in the event you come across this term during your buying or selling experience.

The Basics:  Whether you’re buying land or buying a building, when you take out a mortgage to make your purchase, part of the collateral for the mortgage becomes the property you’re purchasing. This is true no matter what you’re buying, and it’s the reason why a bank or lender can repossess a home that hasn’t had its mortgage paid in a long time.

However, if you’re leasing a property or a piece of land, such as in the event of an office or a business that’s located in a commercial site available for lease instead of for purchase, you yourself don’t own the property. This means that the property can’t be used as collateral against your loan.

With a leasehold mortgage in place, the buildings on the property can be used as collateral even if the land itself can’t be.

Additional Possibilities:  If the owner of the property you’re leasing from agrees to subordinate the fee for the leasehold mortgage, this means the lender’s claims will take priority over the owner’s. So if you, as someone leasing the property, end up owing both the owner and the lender money for the property, the lender will be able to take precedence over the owner of the property to gain back any losses.

Otherwise, the owner of the property will take precedence in terms of the ability to reclaim any losses incurred.

Why Choose One?  There are several situations where this type of mortgage may be appropriate, but a leasehold mortgage will most likely be used when development or construction needs to take place on a property. This means that the person interested in developing a piece of land may lease that land and complete construction on it as part of the mortgage requirements.

From there, if payments are not made, the construction or completed buildings can be repossessed by the owner of the land or by the lender, depending on the situation.

Interest rates are still low and there are many loan options to chose from.  Contact me to get started!