A Mortgaged Home CAN Be Put in a Trust

4 Jan 2023 · 1 min

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In this brief instructional video, the speaker explains that a mortgaged home can be transferred into either a revocable or irrevocable trust without triggering the lender’s due‑on‑sale clause. The legal foundation is the federal Garn‑St. Germain Act, which prohibits banks from demanding loan payoff solely because the property is placed in a trust. The speaker highlights two common motivations: using a revocable trust to avoid probate and using an irrevocable trust to protect the home for Medicaid planning. The message reassures viewers that the mortgage can remain in place while the trust transfer occurs.

Chapters

Yes, even if your home has a mortgage, you can put it into a trust. I get this question every single day, and this is why you can do it. There is federal law that says a bank cannot enforce their due-on-sale clause just because you put your home into a trust. That means they can't require you to pay off a loan. And the same is true whether it's a revocable or an irrevocable trust. If you'd like to check the law yourself, it's the Garn, G-A-R-N, Saint Germain Act. So if you want to put your house into a revocable trust so that it'll pass outside probate, you can, even if you're still paying on the home. If you want to put your home into an irrevocable trust to protect it from Medicaid, you can do that too.