Archive for the ‘Trust’ Category

SO YOU THINK YOUR HOME IS IN A TRUST
September 1, 2011

 Many homeowners have their homes in their trust for tax and legal purposes or to avoid probate.  However, when refinancing a home, a lender will usually require the property to be taken out of the trust and put back into the owner’s name so the owner will be responsible for the loan, not the trust.

 This is well and good, but homeowners often forget to put the property back into the trust once the refinance is complete.  This can cause huge legal and tax consequences!

 Recently we sold a home that had been in a trust until the owner decided to take advantage of low-interest rates and refinance.  At that time, she signed in front of a notary a quit claim deed taking the property out of the trust and another one putting it back in.  The former was recorded with the trust deed and the latter was put aside until that transaction was finished.  Unfortunately, it was filed away with all her other paperwork.

 Sadly, a few months later, she died.  The heirs were also the subsequent co-trustees of the trust which they believed was properly in place.  They put the home on the market and very quickly a buyer was found and escrow was opened.  Everything was going smoothly, getting past the buyers’ physical inspection of the home and their loan process.  Then the call came from the title insurance company – no deed was ever recorded with the county putting the property back in the trust!

 Before considering the alternative, probate, the heirs decided to search their mother’s paperwork hoping that there was a non-recorded deed somewhere.  With the help of friends, they went through boxes upon boxes taken from their mother’s home.  Finally they located the paperwork refinancing the home, and in that stack, they found an unrecorded notarized deed! Subsequently, it was recorded to officially put the house back into the trust.  There was an extra step or two required by the title insurance company, but the transaction closed soon after.  The sellers were happy and the new owners thrilled.

 We recommend that homeowners seek legal and tax advice from an attorney and/or an accountant regarding the method of taking title to real estate.  If you do put your home in a trust and then refinance, make sure that the deed putting your home back into the trust is then recorded.

 

Rich &Jan McMillen

 

www.TOHomes.com