Placing your home in a trust can benefit both you and your heirs. The main advantages lie in your ability to set conditions for how and when your home transfers to designated heirs after you die and in avoiding probate court.
Depending on your estate planning objectives, a living family trust_; a _qualified terminable interest property trust, or QTIP; or a charitable trust are often the best options. Setting up a revocable trust allows you to transfer your home but still modify trust terms while you’re alive.
- A living trust transfers your home to immediate family members.
- A QTIP trust transfers ownership of your home after a surviving spouse dies.
- A charitable trust transfers ownership of your home to a nonprofit organization; although a charitable trust is usually irrevocable, you can set it up as a revocable trust.
Although each one works differently, the setup procedures involved in transferring your home to the trust are similar. All versions require that you transfer ownership from your name into the trust’s name. However, according to the American Bar Association, transferring ownership neither affects your right to live in and use the home during your lifetime nor your responsibility to pay taxes assessed on the home.
Considerations for a Home With a Mortgage
- You’re still responsible for paying the mortgage if there is one. However, while federal laws prohibit a lender from demanding that you pay off any outstanding balance immediately upon placing your home in a trust if it is your principal residence, the law doesn’t apply to a second home or to investment property.
- If you refinance your home after placing it in a trust, most lenders will require that you remove the home from the trust and retitle it inyour name. After the refinance closes, you’ll need to retitle the homeback into the trust’s name.
Transferring the Title
Transferring ownership from you to the trust is a simple process. The transfer does not constitute a sale and most states do not impose a transfer tax charge but instead charge only a nominal recording fee.
Read More: Transferring Property From a Living Trust to a Successor Trustee
Contact a real estate attorney or your local clerk of court or county recorder's office to get the required form. Most locations complete the transfer via a quitclaim deed. You’ll also need the legal property description as provided on the original deed and the home’s tax parcel number, which you can get from a property tax bill.
Enter your name as the grantor and the name of the trust as the grantee. Enter the current date and the name of the county and state in which the home is located. Specify that the home is being transferred between the grantor and grantee and is not being sold. Enter the legal description of the property, including the lot number and tax parcel number.
Sign and date the form in the presence of a licensed notary public.
File the deed with the clerk of court or county land recorder.
Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.