Mortgaged Home Can Be Put In A Trust

24 Jun 2022 · 1 min

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In this concise informational video, the speaker explains that a home with an existing mortgage can be transferred into either a revocable or an irrevocable trust without automatically triggering a lender’s due‑on‑sale clause, thanks to a federal protection that applies when certain conditions are met. Placing a mortgaged home into a revocable trust is generally straightforward, but if the owner later wishes to refinance, the property may need to be removed from the trust, refinanced, and then placed back. For irrevocable trusts, the owner must retain the right to live in the home and be a beneficiary, which satisfies the lender’s requirements. The speaker advises notifying the mortgage company before moving a mortgaged home into an irrevocable trust and, if any issues arise, consulting an estate‑planning attorney for clarification.

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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.