Don't Forget this Important Step When Purchasing a New Home
We recently moved to a new home for the first time in nearly 15 years. There have been a lot of changes. New neighbors, new schools, working with contractors, working with banks. In all the commotion it would be easy to forget that this is a danger spot for our estate plan. Often when a person buys a new home or re-finances an existing home, the bank will prefer that the home be outside of the trust at closing. The intent is usually to deed the home into the trust (or back into the trust) after closing. But in all the post-closing excitement this step can be missed. Assets sitting outside of your trust at death are potentially subject to probate.Some worry that the transfer into the trust will trigger a due-on-sale clause found in most loan documents. A due-on-sale clause in a loan provides that the loan may be called due if the property securing the loan is sold or transferred. A federal law, however, known as the Garn-St. Germain Depository Institutions Regulation Act specifically prohibits lenders from exercising the due-on-sale clause when a title is transferred into a living trust.So I am heading right now to get our house into the trust so my children won’t have to worry about a probate down the road.