Are you considering putting your home into a revocable living trust but worried about triggering the mortgage's due-on-sale clause? As an estate planning professional with nearly three decades of experience, I'm here to address this common concern for you. Read on to learn why you should consider putting your home in a trust to make it as easy, fast and inexpensive as possible for your family to manage your affairsif something were to heep to you and what impact it has on your mortgage.
Why Use a Revocable Trust?
Before we dive into the mortgage implications, let's quickly cover why you might want to put your home into a revocable trust in the first place. The primary motivation is to allow your loved ones to bypass probate when you pass away.
Probate is the court-supervised process of transferring ownership of your assets if you die without an estate plan in place. It can take months or even years, requiring your family to obtain court approval before selling your home or managing your assets. This probate process brings significant legal fees and a host of other potential hassles.
Even if you have a will, your family must still go through probate. A will only dictates how your probated assets are distributed according to state laws, which may conflict with your personal wishes.
The Revocable Trust Solution
By funding a properly structured revocable living trust with your home and other assets, you name a successor trustee (typically an adult child or other trusted person) who can immediately sell the home or handle your affairs according to your instructions – all without requiring probate court involvement.
This simple estate planning step makes the process significantly easier, faster, and less expensive for your loved ones during an already difficult time.
No Mortgage Impact
Now, to address the key issue – how does transferring your home's ownership into a revocable trust affect your existing mortgage? The answer is, it doesn't violate or trigger the mortgage's due-on-sale clause.
This protection comes from the federal Garn-St. Germain Act, which prohibits lenders from calling a mortgage due simply because you've transferred your home's title into a revocable living trust for estate planning purposes.
In other words, you can freely put your home into a properly structured revocable trust to facilitate an easier transition for your family without worrying about impacting your current mortgage terms.
Next Steps for Easy Estate Planning
Removing the probate process from your loved ones' path is just one of many strategies I implement with clients to make settling affairs as straightforward as possible. If you would like to make it as easy and inexpensive as possible for your family to manage your affairs if anything ever happened to you, call us today at either our Florida office at (941) 909-4644 or our Minnesota office at (763) 420-5087 to schedule a consultation or you can fill out the contact form on this page and a member of our team will reach out to you to schedule. We can even do your first meeting over zoom.
Or if you are not yet ready to schedule a consultation and would like to learn more, including advanced techniques for protecting inheritances from divorces, creditors, or mismanagement, I invite you to my upcoming free estate planning masterclass. Click Here to Sign Up
You'll gain a wealth of insights from my decades of experience in trusts, wills, powers of attorney, healthcare directives, asset protection, and tax planning strategies tailored for your unique situation. Don't leave your family to navigate probate alone – make plans now for their ease and financial security later. Click Here to Sign Up
And if you have any other estate planning questions, post them in the comments – I'm happy to share my expertise. Here's to creating a straightforward path for your loved ones and lasting peace of mind.
