Put your home in a trust

10 Aug 2024 · 1 min

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In this brief instructional segment, the speaker explains that a mortgaged home can be placed into a trust despite the presence of a mortgage. Federal law prohibits lenders from invoking a due‑on‑sale clause solely because the property is transferred to a trust, provided certain conditions are met. Placing a home into a revocable trust is generally straightforward, but if the homeowner later refinances, the loan may need to be taken out of the trust, refinanced, and then re‑placed into the trust. Putting a home into an irrevocable trust is more complex; it is permissible only if the homeowner retains the right to live in the property, which makes them a beneficiary of the trust. Retaining that right is the key factor that allows a mortgaged home to remain in an irrevocable trust.

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.