In order to place property into a living trust, does ithave to be fully paid for , or can a mortgage still exist on it?

The Garn-St. Germain Act of 1982, a federal law, does not allow a lender to call or accelerate a loan secured by a single family home if the home is transferred to the owner's living trust. Therefore, transferring title to your home to a living trust, even if you have a mortgage against it, could be done without your lender's permission.

Your further question is not clear - if the question is whether a living trust is necessary if your house is in both spouse's names. The foregoing, however, only determines, at best that the surviving spouse will receive the property upon the death of the first spouse. That leaves unanswered the question of where the property will go upon the second death. It also fails to avoid probate administration of the house, certainly on the second death, and possibly even on the first, depending on the form of joint title which you have, and the provisions of local law.

If you haven't done so already, you should consult a local estate planning attorney as to the establishment of a living trust and the benefits of doing so.

Please be advised that the foregoing discussion is a generalized and hypothetical answer based upon incomplete facts and is not intended to serve as legal advice to you, nor should you regard it as an attorney-client communication or as creating an attorney-client relationship. If you desire legal advice concerning the situation you have described you should contact an attorney who has substantive experience in the fields pertaining to your question.