Home with Loan CAN go in a Trust

7 Feb 2023 · 1 min

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The speaker explains that a home with an existing mortgage can be transferred into a trust despite the due‑on‑sale clause, because federal law generally prevents lenders from enforcing that clause when the transfer meets certain requirements. Placing a home into a revocable trust is usually uncomplicated, but refinancing may require temporarily removing the property from the trust, refinancing, and then re‑placing it. Transferring a mortgaged home into an irrevocable trust is possible if the owner retains the right to live in the home, which makes them a beneficiary. The speaker advises notifying the mortgage company before moving a home into an irrevocable trust, checking the lender’s response, and consulting an estate‑planning attorney if issues arise.

Chapters

Even if you have a mortgage on your home, you can still place it in a trust. There is federal law that says a bank cannot enforce a due-on-sale clause just because you put your home in a trust, as long as certain requirements are met. There is typically not an issue when you're trying to put your home into a revocable trust. Although if at some point you want to refinance the home, you may have to take it out of the trust, refinance it, and then put it back in the trust. If there's going to be a problem, it's typically when you're putting a home into an irrevocable trust. Nevertheless, you can still put a mortgaged home into an irrevocable trust as long as you retain the right to live there and you are a beneficiary of the trust. And retaining the right to live there makes you a beneficiary. I would urge you to notify your mortgage company if you're gonna put it into an irrevocable trust. Find out what their response is. And if there's a problem, contact an estate planning lawyer and they will clear it up for you. I got lots more of this, follow me.