Are you considering incorporating real estate into a trust but unsure about the process? It’s simpler than you might think. This article will delve into the key aspects of transferring real estate into a trust, enlightening you about deeds, mortgage implications, and the decision-making process.
General Warranty Deed vs. Quitclaim Deed
Transferring real estate into a trust typically requires executing a deed. The favored instrument for this is a General Warranty Deed. Here, the grantor (the person transferring the property) promises that the title to the property is valid and that they will defend any claims against the title.
On the other hand, a Quitclaim Deed also facilitates the transfer of real estate, but without any warranty about the title’s validity or defensibility. Though it serves the purpose, it’s less preferred since it may leave the property susceptible to title claims, which would usually be covered by title insurance.
What Happens to My Mortgage?
When it comes to real estate funding, many people wonder about the implications on their mortgage. Mortgages often come with a ‘due on sale’ clause, allowing the bank to demand loan repayment when the property is transferred. However, homeowners are protected from banks invoking their due on sale clause under specific conditions by the Garn-St Germain Depository Institutions Act of 1982. One such condition includes transferring the property to a revocable living trust.
The decision to incorporate real estate into an estate plan warrants a careful evaluation of several factors. For example, if you are considering a refinance of your mortgage, you may want to wait until that process is complete before executing any deeds. Once the decision to move real property into a living trust is made, the process is straightforward and isn’t affected by the existence of a mortgage.
Schedule an initial consultation today
Are you ready to navigate the path of transferring real estate into a trust? As an experienced estate planning lawyer in North Carolina, Brady Cobin Law can guide you through this process, ensuring it aligns with your unique situation and objectives. Take the first step towards secure and well-rounded estate planning with Brady Cobin Law. Schedule an initial consultation today at (919) 782-3500. Also, consider subscribing to our newsletter for the latest updates and expert tips on estate planning. Together, we can craft a plan that best suits your needs and those of your loved ones.