This question seems like an easy one to answer.  To transfer your house into a Living Trust, you want to prepare a deed to transfer ownership of the house from you into the trust.  In Colorado, you can use a Quitclaim Deed, Warranty Deed, General Warranty Deed, or a Special Warranty Deed to transfer ownership into the trust.  Once you have properly prepared the deed to transfer ownership from you into the trust, you can get the deed signed and dated in front of a notary, and then you can record the deed with the county clerk and recorder’s office where the property is located.  That transfers ownership of the house into the trust.  Those are the mechanics of getting a house into a living trust, but there is usually more to the story.

Of course, simply transferring ownership of the house into the trust is not the end of the story.  Many homes that are put into trust still have mortgages to be paid, so you likely need to consider what happens with the mortgage.  You also need to consider why you are putting the house into the trust.  Are you just trying to avoid probate, or are you trying to control what happens to the money after you pass away?  Are you trying to protect the assets from creditors or other future expenses?  All of these questions are important to consider when putting a house into your trust.

 

What Happens With a Mortgage When You Put a House in A Trust?

If you transfer a house into a revocable living trust and that house still has a mortgage on it, then you still need to pay the mortgage, but you don’t necessarily need to tell the mortgage company about the transfer.  In a revocable living trust, you are essentially transferring the house from you to you – just to you as trustee of your own trust.  So long as you keep paying the mortgage, you shouldn’t have any problems with the mortgage company.  If you stop paying, then that is where the problems start!  Also, if you want to refinance the house, a mortgage company may want you to take the house out of the trust and put it back in after the refinance is done.  Not all mortgage companies require this step, but you should be aware that it might be required.  Many mortgage companies are able to refinance a house in a trust if they see you are still in control of your own house as trustee of your own trust.

If you are trying to put a house with a mortgage into an asset protection trust – an irrevocable living trust – that could run afoul of the mortgage company’s rules.  When looking for asset protection, you often give up control of the house and therefore are no longer in control of the house.  If the mortgage company sees this as a transfer of ownership, they may enforce the “due on sale” clause of a mortgage loan, meaning they will want to be paid back any remaining balance immediately.  Unless you are prepared to do so, you want to be much more careful about putting a house with a mortgage on it into an asset protection trust.

 

Keep In Mind Why You Are Putting Your House Into a Trust

There are a lot of reasons to put your house into a trust.  You may want to make the transfer of the house to your children quicker and easier.  A trust can accomplish that.  You may want to control what happens to the house after you pass away – something like stating the house needs to be kept and maintained for minor children to live in, or for a surviving spouse to stay in the house.  A trust allows you to dictate what happens to your assets after you die, so long as the assets stay inside of the trust.  Both of these objectives are great things, and can be accomplished using a revocable living trust.  Putting your house in a trust can be quite helpful to make things easier on your loved ones when you pass away, and can help you take care of those you leave behind.

If you are trying to protect assets from future medical costs or other future creditors, you can accomplish those objectives in an irrevocable trust, too.  You can still get the benefits described above from a revocable trust, you just can create asset protection in an irrevocable trust, if you so choose.  Irrevocable trusts have their own benefits and drawbacks not discussed here, but you can read about them in my other blog posts.

 

Putting Your House in A Trust Does Not Accomplish Everything

As useful and helpful as trusts may be, a trust cannot accomplish everything.  I have people who want to put their assets into a trust to avoid needing to pay back a debt that has already been incurred.  A trust cannot offer that type of protection.  A trust doesn’t mean that if you pass away, your mortgage balance just disappears – wouldn’t it be great if that were the case!  But, alas, that is not how a trust works.  If you owe money on your house and you pass away, the mortgage will still need to be paid or refinanced.  Apparently the banks will still get their money back.  A trust also may not provide complete privacy as to who owns an asset.  Real estate transfer deeds are public record when they are recorded, so a trust alone may not shield you from someone being able to find out who owns a house.  Instead, someone who knows how to search real estate records can probably track down the transfer from you to your trust.  I know there are ways to legally maneuver your way into privacy of ownership, but a trust alone may not accomplish that goal.

 

Putting Your House into a Living Trust Can Help You

If you want to put your house into a living trust, you can certainly do so.  A living trust will likely help you accomplish what you want if your goals are any of the things listed above.  However, to determine the best structure for your trust, and to ensure it accomplishes what you want, you should consult with an experienced estate planning attorney to determine what is the best way to set up a trust for you.  To make an appointment to meet with an attorney, click the button below.