What you should know when you have a Trust, and you are buying a new home

I frequently get calls from past clients who tell me they need to make updates to their trust because they are purchasing a new home. Although I am happy they are thinking about how the purchase of a home affects their trust, this doesn’t always mean updates to your trust are needed.

Here are some things to keep in mind if you have a trust already and you are thinking of purchasing a home:

You are about to make an offer or just made an offer on a home:

If you have found a home you want to buy and you are about to make an offer or you just made an offer, you should notify your lender, escrow, and title company right away. The earlier they know you want to hold title of your new home in the name of your trust, the easier the process is for them to prepare the deed and accompanying documents, transferring ownership from the sellers to you as the trustee of your trust.

Our clients are always provided with a Certification of Trust, which has all the vital information your lender, escrow, title company, and realtor would need. We recommend that our clients share the Certification of Trust as soon as possible so the transaction can be properly documented and the deed created to transfer ownership into the trust right out of the gate.

Also, if you start this process on the front end, then your new homeowner’s insurance policy will also reflect your trust as an additional insured/endorsee on the policy, without you having to take additional steps, after the fact, to have your trust added.

If you are already in escrow:

If your escrow process is already in full swing, and you didn’t let anyone know until now that you wanted to take title to the house in the name of your trust, they may not let you. It isn’t that they won’t let you, it is that making this change at this point can delay the closing of your home. Therefore all parties involved will strongly dissuade you from making this change.

If this happens to you, don’t panic. As soon as escrow closes and you get your recorded deed back showing that the house is now titled in your name, you can now have a new deed prepared transferring your home from you to you as the trustee of your trust.

Please make sure to work with your attorney to make sure the deed is prepared and recorded properly. Paying your attorney to have this done properly can save you from possible future probate. Your attorney’s fees to transfer your home into your trust will be insignificant compared to what possible probate fees could be if you die and your home is not titled in the name of your trust.

If you are transferring your home into your trust after your closing, you will also want to reach out to your homeowner’s insurance carrier to have your trust added as an additional insured/endorsee on your policy.

When updates are needed:

Typically, your trust covers all of your trust assets and the ultimate disposition of them. If you buy a new house, you do not necessarily need to update your trust, aside from making sure the deed is titled in the name of your trust. However, if you want your home to go to a specific beneficiary, then this may trigger a need to update your current trust.

Also, if you refinance your home at any point, it is usually a good idea to check with your attorney to make sure your house is still in your trust. Most lenders are able to refinance without removing your home from your trust; however, I have seen times where the lender moved the house out of the trust, refinanced, and then failed to place the home back in the trust, which again could trigger a future probate.

If you have questions, or need help getting your deed recorded in the name of your trust, please feel free to reach out to see how we may be able to help you. Tel: (619) 819-5085.