The Hive Law - Estate Planning - Wills - Trusts

Putting A House In A Trust: How To Put A House In A Trust

How To Put A House In A Trust - Putting A House In A Trust - Putting A Home In A Trust - Why Would You Put Your House In A Trust

Wondering how to put a house in a trust? 

In this article, you’ll learn about: 

  • the steps for putting a house in a trust
  • what does putting a house in a trust mean
  • who owns the house in a trust
  • what happens to a house in a trust after you pass away
  • why you would put your house in a trust
  • advantages and disadvantages of putting your house in a trust
  • how much it cost to put a house in a trust

Let’s dig in.

Table of Contents

The Hive Law Has Been Featured In

Forbes-150x150
Avvo-2-150x150
Bustle-Logo-150x150
Apartment-Therapy-Logo-150x150
AOL logo
Go Banking Rate Logo
Yahoo Logo

Get A FREE Consultation!

We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)

How To Put A House In A Trust

Here’s a simple step-by-step guide on how to put a house in a trust:

  1. Decide what kind of trust you want: This could be a revocable trust or an irrevocable trust.
  2. Choose a trustee: This person will manage your trust. You can choose yourself, a loved one, or a professional trustee.
  3. Hire a lawyer: While not always necessary, a trust lawyer can help you set up the trust. They will draft the trust document for you.
  4. Create the trust document: This document outlines the terms of the trust. It will include details about the trustee and beneficiaries.
  5. Sign the trust document: Sign the trust document in the presence of a notary public to make it official.
  6. Transfer the house to the trust: You do this by creating a new deed with the trust’s name on it. You’ll then need to sign and notarize the deed.
  7. Record the deed: Take the signed and notarized deed to the county recorder’s office. They will add the new deed to the public record.
  8. Fund the trust: Besides your house, you might want to put other assets in the trust too.
  9. Notify the insurance company: Let your home insurance company know that you’ve transferred the house to a trust.
  10. Keep the trust document safe: Store the original trust document in a safe place, and give copies to your trustee and beneficiaries.

Read More: How Much Do Trusts Cost?

How To Put A House In A Trust With A Mortgage

Here’s a step-by-step guide on how to put a house with a mortgage into a trust:

  1. Identify the type of trust you want: You can choose between a revocable trust and an irrevocable trust with putting a house in a trust.
  2. Pick a trustee: The trustee will manage your trust. This could be you, a family member, or a professional trustee.
  3. Check with your lender: Before you move your house into a trust, confirm with your mortgage lender that they allow this. Some mortgages have clauses that may be triggered by such a transfer.
  4. Get a lawyer: A trust lawyer can help you set up the trust and draft the trust document.
  5. Draft the trust document: This document will have details about the trust, the trustee, and beneficiaries.
  6. Sign the trust document: You must sign this document in front of a notary public.
  7. Create a new deed: You need to draft a new deed that names the trust as the owner of the house.
  8. Sign and notarize the deed: You must sign the new deed in front of a notary public.
  9. Record the deed: Submit the signed and notarized deed to the county recorder’s office. This makes the transfer official.
  10. Transfer the mortgage: Some lenders may require you to formally assume the mortgage in the name of the trust.
  11. Notify your insurance company: Inform your home insurance company that the house now belongs to a trust.
  12. Secure the trust document: Keep the original trust document in a safe place, and give copies to your trustee and beneficiaries.

Read More: Does A Revocable Trust Become Irrevocable Upon Death

What Does Putting A House In Trust Mean?

Putting a house in trust means transferring the ownership of your house from your name to a trust. 

A trust is like a legal container that holds property for someone else.

The person you choose to manage the trust is called a trustee.

The trustee takes care of the house according to the rules you set in the trust document.

The people who get benefits from the trust, like living in the house or selling it later, are the beneficiaries.

This process helps protect your house from certain issues. 

It can avoid probate, which is a long legal process that happens when you die. 

It can also protect the house from certain legal claims. 

Plus, it can provide a clear plan for what happens to the house after your death.

Read More: Do You Need A Lawyer To Remove A Name From A Deed?

Who Owns The Property In A Trust?

In a trust, legal ownership of the property is held by the trustee. 

The trustee is responsible for managing the property as per the trust terms. 

The beneficiaries have what’s called “beneficial ownership.” 

This means they have the right to use the property and receive benefits from it, like income or equity. 

However, they don’t hold the title to the property; the trustee does. 

In some cases, the same person can be both the trustee and the beneficiary.

If it’s a revocable trust, the person who created the trust can change it, dissolve it, or remove properties from it at any time. 

This person is often also the trustee and the beneficiary while they’re alive.

For an irrevocable trust, once the property is in the trust, it usually can’t be removed or altered without the consent of the beneficiaries. 

The person who created the trust gives up control over the property.

The trust document outlines who the trustees and beneficiaries are and how the property should be managed and distributed.

Read More: Who Owns The Property In An Irrevocable Trust

What Happens To House In Trust After Death?

Here is what happens to a house in a trust after the death of the grantor:

  • Trustee Steps In: After the grantor’s death, the trustee takes over the trust. The trustee is the person appointed to manage the trust.
  • Follow Trust Instructions: The trustee carries out the instructions in the trust document. The trust document will detail what happens to the house.
  • Bypass Probate: The house does not go through probate. Probate is the legal process of settling an estate, but assets in a trust avoid this.
  • Transfer To Beneficiaries: The house gets transferred to the named beneficiaries. These are the people the trust owner wanted to inherit the property.
  • Pay Taxes And Debts: The trustee might need to use the trust’s assets to pay any taxes or debts the trust owner owed.
  • House Sale: If the trust instructs, the trustee may sell the house. The proceeds are then distributed to the beneficiaries.
  • Continuous Management: If the trust document says so, the trustee might continue managing the house on behalf of the beneficiaries.

Read More: How To Protect Parents’ Assets From Nursing Homes

Why Would You Put Your House In A Trust

You might be wondering why would you put your house in a trust. 

Here are the main reasons you would put your house in a trust:

  • Avoid Probate: Putting your house in a trust can help your heirs avoid the probate process. Probate can be time-consuming and expensive.
  • Maintain Privacy: Trusts are not public record, unlike wills. This privacy can keep your estate matters confidential.
  • Plan for Incapacity: A trust can provide a plan if you become incapacitated and are unable to handle your affairs. The trustee can manage your assets, including your house, for you.
  • Protect from Creditors: Certain types of trusts can offer protection against creditors. They may not be able to claim assets held in these trusts.
  • Control Distribution: With a trust, you can set specific rules about how and when your assets are distributed after you pass away.
  • Reduce Estate Taxes: For large estates, a trust can help minimize estate taxes.
  • Provide for a Minor: A trust allows you to leave assets, including your home, to a minor child and control their distribution.

Read More: Who Needs A Trust Instead Of A Will?

Reasons People Say Don't Put Your House In A Trust

Here are some reasons why you might not want to put your house in a trust:

  • Costs: Creating a trust can be costly. You’ll need to pay legal fees, notary fees, and recording fees.
  • Time And Complexity: Setting up and managing a trust takes time and involves paperwork. This process can be more complex than creating a will.
  • Mortgage Complications: Some mortgage lenders don’t allow transfer of a mortgaged property into a trust, or they may see the transfer as a reason to call in your loan.
  • Irrevocable Trusts: Once you place your house in an irrevocable trust, it’s hard to change or undo. You lose control over the property.
  • Tax Implications: Depending on the type of trust, there could be tax implications like gift tax or capital gains tax.
  • Trustee Issues: If you don’t choose a reliable trustee, it can cause problems. The trustee will control the trust property after your death.
  • Doesn’t Eliminate Probate Entirely: If you have other assets not in the trust, they will still have to go through probate.
  • False Sense Of Security: A trust only controls the assets put into it. If you forget to transfer an asset or acquire new ones, they may not be covered.

Read More: Does Your House Have To Be Paid Off To Put It In A Trust

What Are The Advantages Of Putting Your House In A Trust

Here are the advantages of putting your house in a trust:

  • Avoid Probate: When you die, assets in your trust bypass the probate process. This makes the transfer of property faster and cheaper.
  • Maintain Privacy: Probate proceedings are public. A trust keeps your estate matters private.
  • Protect Assets: A trust can help protect your assets from creditors, lawsuits, or divorcing spouses.
  • Control Over Assets: You can set specific terms on how and when your assets are distributed after your death.
  • Potential Tax Benefits: Some trusts can reduce estate or inheritance taxes.
  • Continuity of Management: If you become incapacitated, the trustee can manage your property without court intervention.
  • Potential to Save Time and Money: While setup costs may be higher, trusts often save time and money in the long run by avoiding probate.

Read More: Don’t Put Your House In A Trust

What Are The Disadvantages Of Putting Your House In A Trust

Some disadvantages of putting your house in a trust are:

  • Setup Costs: Trusts can be expensive to set up and manage. You might need a lawyer, which increases costs.
  • Complexity: Trusts are more complex than simple wills. They require more time and effort to set up and maintain.
  • Limited Control: If it’s an irrevocable trust, once you transfer your house into it, you lose control over that property.
  • Potential Tax Implications: Depending on the type of trust and your specific situation, there can be tax consequences.
  • Mortgage Complications: Some mortgage lenders don’t allow transfer of mortgaged property into a trust. Others may trigger a “due on sale” clause.
  • Insurance Issues: You might need to adjust your home insurance policy when you transfer your home into a trust.
  • Trustee Management: You need to trust your trustee. If they don’t manage the trust properly, it could cause issues down the line.

How Much Does It Cost To Put Your House In A Trust?

Here’s a simplified explanation of the cost to put your house in a trust:

  • Lawyer Fees: If you hire an estate planning lawyer to set up the trust, it can cost between $1,000 and $3,000, depending on the complexity of your estate and your region.
  • Trustee Fees: If you choose a professional trustee, they may charge an annual fee. This can be a flat rate or a percentage of the trust’s value, typically 1% to 2%.
  • Notary Fees: You’ll need a notary to certify the trust and deed documents. This usually costs between $10 and $30 per signature.
  • Recording Fees: When you record the new deed for your house, the county recorder’s office charges a fee. This can range from $10 to $50, depending on your location.
  • Miscellaneous Expenses: Other possible costs include those for appraisals if your house’s value is unclear, and costs for updating your homeowner’s insurance policy.
  • Future Costs: Remember, there may be ongoing costs to manage and maintain the trust, including potential tax filings and trustee expenses.

Read More: What Assets Cannot Be Placed In A Trust?

FAQs About How To Put Your Home In A Trust

Here are other questions we get about putting a house in a trust. 

Can A Nursing Home Take Your House If It Is In A Trust?

If your house is in an irrevocable trust, a nursing home generally can’t take it to pay for care. 

Once you put assets in an irrevocable trust, they’re no longer legally yours.

So, they typically can’t be used to satisfy your debts, including nursing home costs.

If your house is in a revocable trust, the nursing home might be able to reach it. 

This is because you still control assets in a revocable trust, so they’re often considered available to pay your debts.

There can be complexities, and rules can vary by location. 

Some jurisdictions have a “look-back” period where transfers to trusts might still be considered your assets for a period of time.

Read More: At What Net Worth Do I Need A Trust?

What Does It Mean When A Property Is Owned By A Trust?

When a property is owned by a trust, it means the legal title to the property is held by the trust, not an individual. 

Here’s a simple explanation:

  • Trust Is The Legal Owner: The trust, not a person, owns the property. This is similar to a separate legal entity having ownership.
  • Trustee Manages the Property: The trustee, who is named in the trust document, manages the property. They follow the instructions in the trust.
  • Beneficiaries Receive Benefits: The beneficiaries, also named in the trust document, receive the benefits from the property. This could be income from a rental property or the right to live in the house.
  • Privacy Is Protected: Because the trust owns the property, the real owner’s name isn’t in the public records. This protects their privacy.
  • Probate Is Avoided: When the trust owner dies, the property doesn’t have to go through probate court. It can be passed directly to the beneficiaries.
  • Control Continues: Even after death, the trust document controls what happens to the property. This allows the original owner’s wishes to be carried out.

Does Your House Have To Be Paid Off To Put It In A Trust?

No, your house doesn’t need to be paid off to put it in a trust. 

You can transfer a house into a trust even if you still have a mortgage. 

However, you should check with your lender first. 

Some mortgages have a “due on sale” clause, which could be triggered by the transfer. 

If your mortgage has this clause, you would have to pay off the loan when you transfer the house into the trust. 

But many lenders are flexible and will not enforce this clause when you’re putting your house into a trust for estate planning purposes. 

Still, it’s best to communicate with your lender to avoid any potential issues.

Read More: Why Would You Put Your House In A Trust?

If A Property Is In Trust Can It Be Sold?

Yes, a property in a trust can be sold. 

Here’s how to sell a house that’s in a trust:

  • Trustee’s Authority: The trustee of the trust has the power to sell the property. The trust document should outline this authority.
  • Market the Property: Just like any other property, the trustee can list it on the real estate market.
  • Accept an Offer: When a buyer makes an offer, the trustee can accept it.
  • Close the Sale: The trustee signs the deed to transfer ownership to the buyer. The sale proceeds go into the trust.
  • Distribute the Funds: The trustee uses the sale proceeds according to the terms of the trust. This could mean distributing them to beneficiaries or reinvesting them.
  • Document the Sale: The trustee should keep detailed records of the sale for tax purposes and to report to the beneficiaries.

Get Help Putting Your House In A Trust

If you want help from a trust attorney, fill out the form below. 

At The Hive Law, we understand the importance of:

  • protecting your hard-earned assets 
  • ensuring your family’s future
  • not losing everything to creditors and lawsuits
  • properly (and legally) distributing assets 

We only accommodate a limited number of clients each month.

So don’t miss your opportunity to work with our trust fund lawyers.

Benefits of our trust services:

  • Tailored solutions to fit your unique needs and goals
  • Expert guidance in navigating complex tax and legal matters
  • Preservation of your wealth for future generations
  • Streamlined asset distribution according to your wishes

Avoid the pitfalls of inadequate estate planning strategies:

  • Creditors seizing your assets
  • Lawsuits jeopardizing your family’s financial security
  • Family disputes over inheritance
  • Costly and time-consuming probate processes

Talk soon.

Get A FREE Consultation!

We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)

Share This Post With Someone Who Needs To See It
The Hive Law - Estate Planning - Wills - Trusts

Need to keep your money and property safe? We help make sure your hard-earned assets are protected. Our team knows how to create plans that guard against lawsuits and creditors. We work to keep your wealth safe for you and your family’s future. 

© 2024 The Hive Law

Pinterest
Other Resources

Estate Planning Lawyers

Trust Lawyers

Probate Attorneys

Will Lawyers

Asset Protection Attorneys

Blog

Our Company

Pinterest
Disclaimer

This website is for informational purposes only. It is not legal advice. Consult an attorney if you are seeking legal advice. Check out our privacy policy.

Pinterest