My father has his home in a trust, what does that mean?

Pam, yes & that's my point of asking the OP how the house was bought (and mortgaged) as a trust. The OP mentioned "mortgage of 20 years", which I'm assuming means there is still a mortgage on it with 20 years remaining but maybe that's not it???

Igloo, I didn't think you could put a house with a mortgage into a trust. I thought you had to own it free and clear?

Awwwwwg, should read..."So how are these being paid?"

In addition to the very detailed info GA has provided you, I'd suggest you also look into how the trust is / will continue to be funded.

Some sort of $$$ is being used to pay the mortgage, property taxes, upkeep, etc on the house which is "owned" by the trust. So hare these being paid? Often a trust is funded by investment sources or dividends which pay into a trust bank account, so family isn't feeling the pinch of paying all things "house" but if the market goes wrong for the trust, so no $ in, then paying house costs put family in panic at worst or a bind at best, as they haven't had to ever pay house costs.....

Out of curiosity, do you know how this house was bought as a trust and got a mortgage written to the trust? My experience has been that mortgage co. are not apt to lend on a trust as a trust has no job, no monthly income, no traditional FICO score unless there is a lot of other wealth in the trust to cover the risk of lending. So it's not the usual FHA or VA mortgage that is done.

Mea culpa - I just realized I missed that your father apparently is the sole holder of the trust, rather than both your parents. My apologies.

I should have added that if all the assets are (a) titled in the name of the trust or (b) held jointly with others, to whom the assets would pass directly on death b/c of that ownership, then trusts allow the avoidance of probate - no local oversight by a probate court.

This method of avoiding the rigamaroles of probate courts is one of the reasons some attorneys and some nonattorneys get on the trust bandwagon. There's much more privacy with a trust - you don't have to file accountings of assets, expenditures, or make aspects of the trust public. You still have to file federal taxes though.

Happy, trusts are complicated instruments and probably require more explanation than can be provided here. In Michigan, certain conditions we wanted to make couldn't legally be handled via a will, so a trust was necessary. Other people have their own reasons for putting their assets in trusts.

There are a variety of trusts as well, including living trusts, charitable trust, irrevocable trusts and special needs trusts.

After execution, a trust is "funded" by transfer of a house and financial assets into a trust. The holders of the house, any other real estate property, financial instruments (CDs, mutuals, stocks) would execute a deed to transfer ownership of the real property. I don't remember how we retitled the financial instruments.

The method of disposition of assets, or exclusion of someone from receiving assets, are detailed in the trust, which as I wrote earlier can be more flexible if someone is to be disinherited or precluded from attempting to get any assets.

A "Pour-Over Will" is executed as well; this links provisions and assets addressed in the Will to the Trust. If the assets aren't properly transferred to the trust, though, they aren't protected by it.

All of these assets would then be assets of the trust, for the benefit of your parents. Generally your parents would be the initial Trustees, with successor trustee(s) named after their death, or on other conditions specified.

Your parents still own the assets; they're just retitled in the name of the trust.

One thing this does is put the assets in a compressed tax bracket, i.e., they're taxed at higher rates more quickly. This is one of the reasons trusts aren't DIY projects. There are a lot of legal and tax innuendoes that are best understood by attorneys.

If you or your siblings aren't named as successor trustees, you have no obligations for trust management.

You might now be wondering what does a trust accomplish? That depends on the type of trust, and the specific reason(s) an attorney would recommend a trust instead of a simple will.

It's not always very clear how a trust operates; dealing with one is definitely a learning experience, especially filing the trust taxes.