Estate Planning Attorney in Laguna Hills, CA | Confidential Consultations
Estate Planning Attorney in Laguna Hills, CA | Confidential Consultations
One of the most common questions I receive as an estate planning attorney is:
“Can I add my home to my living trust if I still have a mortgage?”
The answer is yes, you can, and the best part is that you do not need to refinance your mortgage to do it.
For many California homeowners, transferring a home into a revocable living trust is one of the most important steps in protecting family assets, avoiding probate, and ensuring your property passes smoothly to your loved ones.
But the process involves more than simply signing paperwork. You need to understand how your mortgage, your property title, and your lender are affected when you transfer your home into your trust.
Let’s walk through how this works step by step.
Before adding your home, your trust must already be established.
A living trust is a legal arrangement that holds your property and assets such as your home, bank accounts, or investments and outlines how they are to be managed or distributed.
If your home is not actually transferred into your trust, it remains in your personal name and will still have to go through probate when you pass away.
That is why creating your trust is only the first step. The second, equally important step is funding the trust which means transferring your assets into it.
Pro Tip: Many people create trusts through online platforms or DIY services but never complete this funding process. As a result, their estate plan does not work when it is needed most.
While there are online forms available, transferring real property into a trust is a detailed legal process that must be done correctly.
Even a small mistake in the deed or recording can cause serious problems later, such as title defects or an invalid transfer.
Working with an experienced estate planning attorney ensures that your transfer is legally sound and properly recorded.
A qualified attorney will:
If you are in Orange County, this process is typically handled through the Orange County Clerk-Recorder’s Office.
Once your trust is established, your attorney should prepare a new deed transferring ownership from you as an individual to you as the trustee of your trust.
For example:
“John Smith, a married man, hereby grants to John Smith, trustee of the John Smith Living Trust dated January 10, 2025, the real property located at [property address and physical description of the property].”
The new deed must then be recorded in the county where the property is located.
When the deed is recorded, your home officially becomes a trust asset.
However, this transfer only affects ownership; it does not change or transfer your mortgage. That leads us to the next step.
If your home has a mortgage, you might worry that transferring it into a trust could trigger the due-on-sale clause or force you to refinance.
Fortunately, that is not the case, at least not for your primary residence.
The federal Garn-St. Germain Depository Institutions Act of 1982 protects homeowners in exactly this situation.
Under this law, a lender cannot enforce a due-on-sale clause or change the loan terms simply because you transferred your home into a living trust, as long as:
In plain language, your mortgage stays exactly the same. You will not need to refinance, reapply, or even contact your lender. Your payment schedule, interest rate, and terms all remain unchanged.
You are still personally responsible for making the mortgage payments, and your lender cannot alter the terms of your loan simply because the home is now owned by your trust.
The rules for non-primary residences such as rental or vacation homes can be a little different.
Many mortgages on these properties include a due-on-sale clause, which technically gives the lender the right to demand full repayment if ownership changes.
In practice, it is extremely rare for a bank to enforce this clause, especially when the mortgage is current and payments are being made on time.
Still, it is always best to be proactive.
Best Practice:
Before transferring a rental or vacation property into your trust:
In my experience, lenders almost never object. I have personally helped hundreds of clients transfer their rental and vacation properties into trusts, and I have never seen a bank call in a loan as long as payments were made as agreed.
Banks care far more about getting paid on time than about the technical ownership of the title.
In California, every property transfer must be recorded in the county where the property is located.
Each county has its own procedures and requirements.
For example:
Regardless of location, make sure the deed:
Once it is accepted and recorded, the property is officially held in your trust and will follow the rules you have outlined in your trust document when you pass away or become incapacitated.
One of the most common issues I encounter with estate plans is when people forget to fund their trust, especially if they worked on a DIY estate plan.
Creating trust is only part of the process. If you do not actually transfer ownership of your property into the trust, your estate plan will not function as intended.
An unfunded trust means that your home is still legally in your name and may have to go through probate even though you have a trust.
If you are unsure whether your home has been correctly transferred into your trust, your attorney can easily check your county’s property records to confirm.
Yes, absolutely.
Many Californians own real estate in other states like Arizona, Nevada, or Texas. These properties can also be included in your California trust.
You will simply need to record a deed in the state and county where each property is located.
In some cases, your estate planning attorney may coordinate with a local attorney in that state to ensure compliance with local property laws.
You do not need separate trusts for each property. A single, well-drafted California trust can hold multiple properties across different states.
When handled correctly, transferring your home into your living trust is a simple and powerful way to secure your family’s future.
Creating a living trust is one of the best things you can do to protect your home, your loved ones, and your peace of mind.
At Pevney Estate Planning, we help California homeowners ensure their property is properly transferred into their trusts and their estate plans work exactly as intended.
If you own a home and want to make sure it is protected, now is the perfect time to take that step.
Schedule your free 30-minute consultation today with Michael Pevney, your trusted Orange County estate planning attorney.
