Transferring Your Residence to Your Trust
Your home is likely one of the largest assets in your estate and one you will probably want to transfer to your trust. A deed is the document that must be prepared and signed to transfer ownership of your home or any real estate (also called real property) into trust. A quitclaim deed is one of the simplest ways to do this and one that you can likely do yourself.
Warranty Deed vs Quitclaim Deed
There are two primary types of deeds used to transfer ownership. A Warranty Deed provides assurances or guarantees to the transferee from the transferor, for example that the property is owned by the transferor and they can transfer clear title to the property. It is probable that you received a Warranty Deed when you purchased your home. A Quitclaim Deed contains no guarantees of any kind. They are common when property is placed in a trust or when an interest in real estate is received as part of a divorce settlement.
If you are using IEDS.online, preparation of the transfer deed is included at no extra charge in the package of documents which can be selected for creation. If you are not using IEDS for preparation of your estate planning documents and other necessary forms, you will need to get a state specific deed form. You should be able to find one online. You may also find one at a local law library by checking books on real property that have forms that you can photocopy.
Most deeds require the same basic information:
- Current Owner’s Name – If you are the sole owner or are transferring only your separate share of the property to trust use only your name. If joint owners are transferring the property use both parties’ names. You should use the same form of your name as was used on the deed when you received your interest in the property.
- New Owner’s Name – Enter your name(s) as trustee(s) exactly as it appears in the title of your trust agreement U/T/A (which stands for Under Trust Agreement) and the date you signed your trust.
- Legal Description of the Property – Copy the legal description exactly as it appeared on the previous deed.
If you co-own the property with someone else and are only transferring your share, you need to state, along with the legal description that you are only transferring that share (a one-third interest, for example) or that you are transferring “all your interest” in the property.
Once completed, sign and date the deed in the presence of a notary public for the state where the property is located. Be sure that everyone who is a current owner of the property transferring their interest signs the deed.
Recording the Deed
Once the deed form is prepared, it must be filed (recorded) with the county registrar where the property is located, and you will typically need to pay a filing fee. Take the original signed, notarized deed and copies to the registrar’s office (may be called land registry or bureau of conveyances or similar name). The registrar will stamp and return the original with a reference number to indicate where the deed can be found in the public records.
Caution: Bad legal descriptions, improper execution formalities, and misstatements of the manner is which title is to be held are just a few examples of how a simple quitclaim deed can result in costly errors. There may also be special titling requirements to take advantage of protections afforded by specific state laws. For example, in Hawaii the law allows married couples to transfer real estate into trust without losing the creditor protections afforded by titling property as tenants-by-the entirety. But specific requirements for the trust name, provisions and deed of conveyance must be met in order to receive those protections, HI Rev Stat § 509-2. Bottom line here is that even if you decide to do the transfer yourself, you may save time, money and trouble in the future by having your deed reviewed by a knowledgeable local attorney.
Mortgage Due-on-Sale Clauses
Transferring your real estate to your trust should not affect your mortgage. In most cases, lenders are forbidden by federal law from invoking a “due-on-sale” clause when property is transferred to a living trust. The borrower must be a beneficiary of the trust and the transfer must not relate to a transfer of rights of occupancy in the property, 12 U.S. Code § 1701j-3(d)(8).
Be sure to check on your title insurance (if you have any) though. It may be possible to simply transfer it to the trust, or your title insurance company may require that the trust buy a new policy. Once the property is transferred, you may need to change your homeowner’s insurance to designate the trust as owner of the property. If you receive a real estate tax or homestead exemption, you’ll want to make sure it is properly applied by providing documentation of the trust to the taxing authority, such as a certificate of trust (which is one of the documents created with each document package from IEDS.online).
This article on How to Transfer Real Estate to Your Trust is provided by Interactive Estate Document Systems – The web’s leading resource for Do It Yourself Estate Planning Documents. Find out more about IEDS.online.
This article contains general legal information and does not contain legal advice. IEDS.online is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please consult a lawyer licensed to practice in your specific jurisdiction.