Why Putting Your Home in a Trust Makes Sense

How to Put Your Home in a Trust

The process is straightforward — it doesn't require selling or refinancing your home. It's simply a title change:

Common Concerns — Addressed

• "Will putting my home in a trust affect my mortgage?" No — transferring your home into a revocable living trust does not trigger a due-on-sale clause under federal law (Garn-St. Germain Act). Your mortgage stays exactly the same.
• "Will it affect my homestead exemption or property tax benefits?" In most states — including Arizona — transferring your primary residence into a revocable living trust does not affect your homestead exemption or property tax status. Verify with your county assessor to confirm.
• "Will I still be able to sell my home?" Yes, completely. As trustee, you retain full authority to sell, refinance, or lease the property at any time. The trust simply holds title — it doesn't restrict your use or control.
• "What about homeowners insurance?" Notify your insurance company of the title change. Most insurers add the trust as an additional insured on your existing policy with no premium change. Some may require a minor policy update.
• "Do I need to refinance?" No. The transfer of the property into a trust has no effect on your existing mortgage terms. No refinancing is required or triggered by the title change.

When Putting Your Home in a Trust May Not Be the Best Approach

In most situations, placing the home in a trust is the right choice. But there are limited circumstances where a different approach may be more appropriate:

• Medicaid planning in Lady Bird states. In Florida and Michigan, a Lady Bird Deed on the home — rather than placing it in the trust — may offer better Medicaid estate recovery protection. The home sits outside both the trust and the probate estate, potentially removing it from Medicaid's reach entirely.
• Very simple situations with a single property and minimal other assets. An Arizona beneficiary deed combined with POD designations on all accounts can achieve probate avoidance at a fraction of the cost of a trust — if and only if incapacity protection and distribution control are not needed.
• Upcoming sale within a short window. If you plan to sell the home within months, the transaction costs of transferring in and then selling as trustee may not be worth the short-term effort compared to simply ensuring the will or trust addresses the sale proceeds.

Common Mistakes

• Creating a trust but never transferring the home into it. The single most common estate planning failure. A trust that doesn't hold the home provides zero probate protection for it. The deed must be changed.
• Refinancing without re-deeding the home back into the trust. Some lenders require the property to be taken out of the trust during refinancing. After closing, it must be deeded back in. Many homeowners forget this step and are surprised when their home isn't in the trust anymore.
• Not notifying the homeowner's insurance company. Failing to update insurance after retitling can create complications during a claim. A quick call to your insurer handles this easily.
• Assuming the deed change is complex or expensive. Many people delay because they think retitling the home is a major undertaking. It's not — it's a simple deed recording, typically handled in a single appointment and costing under $100 in most cases.
• Using a quitclaim deed when a grant deed is more appropriate. Quitclaim deeds provide no warranty of title. A grant deed or warranty deed is typically the correct instrument for transferring property into a trust and provides stronger title protection for the trust.

Real-Life Example