After purchasing a rental property, you may decide that you would like to place it inside of your living trust. Placing the home in a trust provides you with numerous advantages, including avoiding the need for probate—giving you more control over the asset’s distribution. Fortunately, placing the rental home into your trust is relatively simple. The following is an overview of the steps involved in the process.
Six Tips for Moving Rental Property Into a Trust
In order to move your rental property into your trust, take the following steps:
- Draft a deed that grants the property from you, individually, to yourself, as trustee of the trust. The deed should include your full name, the trust’s name, and a legal description of the property.
- Draft a “Preliminary Change of Ownership Report” and send a copy to the county tax assessor in order to determine whether you owe any tax for moving the property into your trust.
- Contact your current mortgage lender if you have any concerns about whether the transfer could trigger a due-on-sale clause within your mortgage. Your attorney will explain the pros and cons of notifying the bank of the transfer.
- If you want to include specific provisions within your trust relating to the rental property, have your attorney draft an amendment to the trust to incorporate those changes.
- Notify the insurance carrier of any current insurance policies in order to ensure that they understand the property is being moved into your trust.
- Record the new deed at the appropriate county recorder’s office.
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