Funding Your Revocable Trust – Real Property

You’ve heard the term “funding your trust” and we’ve discussed transferring your bank and investment accounts you know that it’s important for purposes of avoiding probate, but what assets should you be putting in trust? This article takes a look at real property and a few common questions many individuals have when transferring real property into the name of their revocable trust.

Why is transferring real property into my revocable trust important?

Generally speaking, most real property should be held in the name of your revocable trust. To transfer real property into your revocable trust, a new deed reflecting the name of the revocable trust must be executed, notarized and recorded with the County Recorder in the County where the property is located. Great care must be taken to ensure that the exact legal description from the existing deed appears on the new deed and the names of the grantor(s)/grantees(s) are also correct and proper. If the deed is not drafted or executed properly, the County office may not transfer the title of the property. Typically, the driving purpose to retitling your real property into the name of your revocable trust is so your beneficiaries and heirs can avoid the costly and timely procedures of probate.

What if I have an established revocable trust and I buy new property?

As you acquire new property, simply instruct the escrow officer handling the transaction that you wish to have the title recorded in the name of your revocable trust. You may need to provide the escrow officer or title company with a copy of the Certificate of Trust or other documents as determined by the escrow company you are working through.

Will the transfer to trust accelerate my mortgage?

Federal law prohibits acceleration of any indebtedness by any lending institution or private individual on a transfer of residential real property into a revocable trust. However, where there is an existing indebtedness on real property other than residential (e.g., commercial and/or multi-unit), it will be necessary to contact the financial institution holding either the mortgage or deed of trust before placing it in the name of your revocable trust. The failure to obtain the lender’s consent to the transfer of non-residential property could potentially lead to the lender attempting to accelerate the loan based on a “due-on-sale” clause contained in some notes or deed of trust. Typically, such consent will be granted by the lender after it has reviewed the Certificate of Trust and the appropriate assignment documents have been executed. While we are keeping this blog related to transferring your interest in real property, it is important to transfer your interest in other assets to your revocable trust (i.e. LLCs and business ventures) which we will explore in later posts. If you have questions about transferring other assets into your revocable trust now, contact us to schedule your free 30-minute estate planning consultation.

What if I own real property in another state?

The wonderful thing about putting assets into your revocable trust’s name (or in legal terms: having a “properly funded” revocable trust) is that you can also avoid probate in states outside of the state your revocable trust was established. Not only is transferring real property located in another state into your revocable trust important, it is typically straightforward. While different states and counties may have different requirements in terms of paperwork and turn-around time, the Law Offices of C. David Martinez will work to ensure the transfer is handled appropriately.

Do you have additional questions about funding your revocable trust? Schedule a free 30-minute estate planning consultation today and let us provide you with the tools you need to reach your estate planning goals.

This article is provided as a public service by the Law Offices of C. David Martinez, PLLC. While the information on this site is about legal issues, it is not legal advice or legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein.