How to put house in trust with mortgage
Yes, you can put your house in a trust—even if you still have a mortgage. You don’t need to wait until your home is fully paid off, and in most cases, you don’t even need a lawyer to do it. Let’s walk you through exactly how to put your house in a trust, the costs, the tax benefits, and whether it’s the right move for you.
Can You Put a House in a Trust with a Mortgage?
Absolutely. Your house does not have to be paid off to put it in a trust. Many people place their mortgaged homes into a revocable living trust to avoid probate and make estate planning easier for their loved ones.
You’ll still be responsible for making monthly mortgage payments, and your lender will likely not object as long as the loan continues to be paid on time.
Who Pays the Mortgage on a House in a Trust?
Even when your house is in a trust, you are still the one responsible for the mortgage. Putting your house in a trust doesn’t change the loan terms. The trust holds the property, but you (as trustee or beneficiary) still handle the payments.
How to Put a House in a Trust (Step-by-Step)
Here’s a simplified guide:
1. Choose the Type of Trust
Most homeowners use a revocable living trust, which allows you to maintain control of the property during your lifetime.
2. Create the Trust Document
You can do this with an estate planning attorney or use an online legal tool if your situation is simple.
3. Transfer the Deed
This is key. You’ll need to file a new deed that transfers ownership from your name to the trust. Your mortgage lender may need to be notified, but most won’t block the transfer.
4. Update Your Insurance
Make sure your homeowner’s insurance and title insurance reflect the trust as the new owner.
How Much Does It Cost to Put Your House in a Trust?
The cost of putting a house in a trust can vary:
- With a lawyer: $1,000 to $3,000, depending on your location and complexity.
- DIY or online tools: $100 to $500, but only recommended if you’re confident and your estate is straightforward.
Can I Put My House in a Trust Without a Lawyer?
Yes, you can put your house in a trust without a lawyer if you’re comfortable handling legal documents. However, if you have a complex estate or want peace of mind, it’s a good idea to consult a professional.
Tax Benefits of Putting House in Trust
There are some tax advantages, especially when it comes to estate taxes and stepped-up basis benefits for your heirs. However, putting your house in a trust usually doesn’t give you direct income tax savings during your lifetime.
Don’t Put Your House in a Trust. Here’s When to Think Twice
While trusts are powerful tools, they’re not for everyone. Here are a few reasons you might not want to put your house in a trust:
- If you’re planning to sell the house soon.
- If you don’t want to deal with paperwork.
- If you have other ways to transfer property, like joint ownership or a transfer-on-death deed.
Why Put Your House in a Trust Anyway?
- Avoid probate: Your heirs can skip court.
- Faster asset transfer: Especially helpful during difficult times.
- More privacy: Trusts aren’t public records like wills.
- Control: You decide how and when assets are distributed.
Final Thoughts: Is It Worth It?
If you’re thinking about estate planning and want a smooth transfer of your home to loved ones, putting your house in a trust even with a mortgage is often a smart, practical step. It’s cost-effective, doesn’t affect your mortgage payments, and comes with long-term peace of mind.
