Put home with a mortgage in your trust

12 Jan 2024 · 1 min

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In this brief video, Jerry Taylor explains that federal law—specifically the Garn‑St. Germain Act—prevents lenders from invoking a due‑on‑sale clause merely because a homeowner places the property into a trust, regardless of whether the trust is revocable or irrevocable. Consequently, a homeowner can transfer a mortgaged house into a revocable trust to avoid probate, or into an irrevocable trust to shield the asset from Medicaid eligibility assessments, without triggering loan acceleration.

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, St. 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.