Answers to your most common questions about owning property in a trust

There are a lot of questions that come up in terms of owning property in a trust. That’s why you sometimes need to turn to someone well versed in estate planning and trusts to help navigate the process. Nicole Warmerdam is one of them. She’s the owner of the Law Office of Nicole Warmerdam, and a California board certified specialist when it comes to trusts and estates. She operates out of San Mateo, but regularly helps clients in the Greater Bay Area. 

Warmerdam says the process isn’t over when you sign documents with a trust. You then need to transfer over the title of your assets, such as real estate, bank accounts, etc., into the trust. She says a lot of time people come to her because they’re a first-time property buyer with a trust, but sometimes they already own property in a trust and want to sell or refinance.

Buying a property 

If you’re considering buying a new property, or even your first property, you don’t have to buy it individually, then transfer it into your trust. Warmerdam says a lot of people don’t realize this. Instead, you can purchase it in the name of your trust. Rather than the property being listed under your name, its lists your name as the “trustee of your trust”. 

If you don’t do it this way, it can be done later, but it’s not quite as easy. When you buy directly in a trust, Warmerdam says you save yourself money and time. Doing it afterwards means finding someone to get the deed into the trust. Make sure everyone involved knows it’s happened too, including escrow and title. They may want to see the trust and want a copy of the certification of trust.

Selling a property

Much like buying a property in a trust, when you sell real property you own in a trust, you won’t see your name listed as the seller. Instead, it will list your name as the “trustee of your trust”. There could be some more paperwork and some additional disclosures, but it’s really not all that different in terms of the actual process. 

Warmerdam’s also seen people who are refinancing properties they’ve put into trust. Rates may be going up, but they’re still historically low, and she says some people out there are still refinancing. 

Refinancing a property 

In fact, Warmerdam says, that’s something people might do several times over the course of a loan. They may be trying to get a better rate, or they may be trying to cut down the length of their mortgage. She says the biggest thing people need to remember is to make sure the property goes back into trust at the end of the process.

Usually, in the case of refinancing a property in a trust, the house comes out of trust, the refinance happens, and then it goes back into trust. Sometimes, though, that last part doesn’t happen. She says if you’re refinancing a property in a trust, check with escrow and title to make sure the house is indeed back in a trust at the end of the process. It’s much easier to do it right away than to wait, but unfortunately some property owners don’t realize it right away when it doesn’t happen. 

So, why does this need to happen? Why does the property need to come out of a trust for refinancing? It could have to do with the legal review, but more likely, Warmerdam says, it’s because a loan is taken out as an individual and a trust is generally what’s referred to as the additional insured.