Buying And Keeping Your Home In Your Trust
Avoiding probate is the most popular reason to have a trust second only to privacy concerns. The most common asset held in trust is a home. Buying and keeping that home in your trust can be a challenge. Here are some tips.
Buy in the Trust’s Name
When you buy your home, make sure the buyer is your trust and not you. The purchase contract should list the trust as buyer. Most trusts have an obvious clause explicitly stating how to title property or contracts in the name of the trust. There was a time when mortgage rates for individuals were slightly lower than rates for trusts. If you find an experienced mortgage broker, the rates should be the same.
Title Company Handles Deed & Title Insurance
When you buy your home in the trust’s name, a title company will draft the deed of conveyance to the trust and issue title insurance directly to the trust. The title company may ask for a complete copy of your trust. Resist that request. Your trust is private. Keep it private. All the title company needs is a Certification of Trust which any qualified estate planning lawyer provides as part of your trust plan. Sometimes the name is different. Look for something that is a sworn, notarized statement about the trust name and the trustees. As an alternative, some title companies will accept the first couple trust pages and the signature pages or something called a Statement of Authority. If the title company insists on the entire trust, call Chicago Title or First American in Evergreen, Colorado. And that is how this plays out every time. Front line title company person insists on the entire trust. We get a call. We send an email or phone call that the entire trust is not required, and we have another title company we’d like to use. Fifteen minutes (and $200) later the title company changes its tune.
Refinancing
Sometimes refinancing is desired or a home equity line of credit (HELOC) after your trust takes title. The lender may request that you convey your home out of the trust and into your name. Again, resist that request. If you initially financed your home in your trust, you shouldn’t have to take your home out of your trust to refinance. Where you might have an issue is if the original financing was in your individual name and then after the home is conveyed to your trust, you want a HELOC.
The Colorado Beneficiary Deed Option
There are exceptions to the general rules listed above. If it is necessary to take title in your individual name, consider leaving the home in your individual name and naming the trust as the transfer on death beneficiary using a Colorado beneficiary deed. Not my favorite option because of privacy concerns, but sometimes the best alternative.