My mortgage rate is so low that I do not want to change title in any way because the lender tells me that the loan will change if title changes. I am not really concerned about probate for my heir so can I just let my estate plan remain as is where everything is sold and the the heir inherits.
A "typical" revocable trust is created mainly to avoid probate and provide you with a document presenting your wishes in regard to your assets both during your lifetime and after death- it will not change the way you pay a lender, your personal taxes, or protect from personal liability. Your lender is more than likely incorrect - however, all banks are different- I say the lender may be incorrect because I have never once in my years of experience had any trouble with a lender and a home being titled in the name of the individual's revocable trust. I would ask for a supervisor and also for the lender to point out in your contract where it states that an individual may not title their home in a revocable trust created by the homeowner and for the sole benefit of the homeowner.
In regard to your statement that you are not concerned with probate- this IS concerning. Probate is a terrible place for heirs to be. I strongly urge you to contact an estate planning attorney- the attorney can also call the lender for you and receive a letter of agreement allowing you to place the home in the trust.
My answer is based on the limited information provided in the question and therefore is prepared for informational purposes only and is not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. Anyone viewing the information should not rely or act on it without seeking professional counsel. My answer is not intended to constitute legal advice or to substitute for obtaining legal advice from an attorney licensed in your state. My answer is not intended to be advertising under applicable laws and ethical rules.
When you transfer property to yourself from an individual to yourself as trustee, you are technically changing title to the property. Many estate planning attorneys worry that transferring title to real property from an individual to the same individual as trustee of a trust will cause the lender to enforce the "due on sale clause." I would get permission from the lender to put your home into the trust. However, I am not aware of any case law of a lender enforcing the due on sale clause when there has been a mere change in title from an individual to the same individual as trustee.
Transferring your home to a trust that is revocable by you, and in which you are the beneficiary, will not trigger any due on sale clause. Federal law prevents this. If your lender is telling you otherwise, you should consult with an attorney near you for specific advice. There will also be no property tax reassessment because while there has been a change in title, there has been no change in ownership under the applicable law. One area that is somewhat murky is whether or not transferring the property to your trust will terminate any title insurance policy that you acquired when you purchased the home. The language of the policy with control, but in my experience, title insurance companies are willing to allow coverage to continue, even if it would have otherwise lapsed, but may charge a fee.
This general response is not intended to create an attorney-client relationship.
Yes. Transferring property into a revocable trust that you are beneficiary of is a technical change in title. You are transferring property ownership from you individually to you as trustee of your trust.
However, such transfer does not trigger any due on sale clause. Federal law prohibits lender from calling the loan. If lender is telling you otherwise, lender is mistaken.
Property taxes will not be reassessed.
Transferring property into may terminate title insurance policy that you likely acquired when you purchased property. Language of the policy with control. Most title insurance companies will continue coverage. Check with your insurer.
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