You Titled Your House to a Trust. But You’re Not Done Yet.
Take care to properly fund your trust.
You have probably heard of the benefits of a revocable living trust and the benefits that flow from transferring title of your home to the trust. Doing so avoids probate, preserves privacy, and allows for seamless handling of the home during incapacity and at death. But titling the home to the trust is only the first step. The non-deed paperwork concerning the house also has to catch up. Unfortunately, most people never go back and finish the job.
What Happens When You “Put Your House in a Trust”?
A trust functions like a bucket. You establish the trust (the bucket) but that bucket is empty until you fill it (fund the trust with assets). Any assets assigned or titled to the trust (that is, anything in the bucket) is subject to the terms and conditions you set out in your trust agreement.
With that in mind, when your attorney or other professional drafts a new deed transferring your home from you, individually or as a couple, to you as trustee(s) of your trust, something real happens on the paperwork. At that point, you are filling the bucket (the trust). Also at that point, the trust, and not you personally, becomes the legal owner of the property. That’s the whole point of a trust and it is what lets your home avoid probate, pass smoothly to your beneficiaries, and (depending on the type of trust) offers creditor or Medicaid planning protection.
That sounds great, right? But the deed only updates one record and that is the one at the county land records office. Nothing about that recording that deed automatically flows to any of the other institutions that also have your home’s ownership in their files.
The Insurance Gap.
Insurance is the issue that trips people up most often, and it’s almost always an invisible issue until you need it.
Your homeowner’s insurance policy is a contract between you, personally, and the insurance company. When you signed up for your policy, you told them you own the home. The insurer’s records and underwriting, and their obligation to pay out a claim, are all built around your name as the owner.
Once your deed says the trust owns the home, but your insurance policy still says you own it, you now have an ambiguity sitting quietly in your files. Nothing about daily life changes. You still live there. You still pay the premium. The house looks the same to everyone. Then you file a claim, for a house fire or for a flooded basement, and the insurance company reviews who owned the property at the time of loss and sees different names on their documents.
Depending on the insurer and the specific circumstances, an unaddressed title-versus-policy ambiguity can lead to:
Delayed claims processing while the insurer investigates the ownership discrepancy;
Requests for additional documentation you may not have readily available; and/or
In some cases, denied or reduced coverage, particularly if the insurer argues the “named insured” no longer has an insurable interest matching the title.
The fix is simple, and it’s a call you will want to make after signing your trust paperwork and funding your trust with your home. You will want to contact your insurance agent and have the trust added to the policy. This is typically done by adding the trust as an additional named insured or via an endorsement, depending on your carrier’s process. It’s usually a five-minute phone call but, unfortunately, it’s a call almost nobody makes.
Other Potential Paperwork Gaps.
Insurance is the most common gap, but it’s not the only part of trust funding the people miss. Attorneys call the process of retitling assets into a trust “funding” the trust and it is important to understand that funding is not a single event. Rather, it’s a checklist and every item on it has its own paperwork trail that doesn’t update itself. Here are some of the common paper trails that will need to be updated once you establish your trust and are ready to fund it:
Your mortgage. If your home still has a mortgage, moving it into a revocable living trust generally does not trigger the “due on sale” clause. Federal law (the Garn-St. Germain Act) protects transfers into a trust for the benefit of the borrower or their family. But your mortgage servicer should still be notified, because escrow statements, tax documents, and payment records are all tied to the name on file.
Property tax exemptions. If you have a homestead exemption, veteran’s exemption, or other property tax benefit tied to individual ownership, some jurisdictions require a follow-up filing or notice to confirm the exemption survives the transfer into a trust. In the Commonwealth of Virginia, for example, this typically involves checking in with your local Commissioner of the Revenue to confirm your exemption remains intact once the deed reflects your trust as the property owner.
Utilities, HOA, and title-adjacent accounts. These accounts rarely cause legal problems on their own. However, real friction can occur later for whoever steps in as your successor trustee. If the HOA or utility accounts still reflect your name instead of the trust’s, your successor trustee may need to produce documentation just to prove they have authority to manage or close accounts. This is an extra step at a moment that’s often already stressful. Also, it’s worth noting that some HOA governing documents also require owners to formally notify the association of any transfer of title, including a transfer into a trust, so it is worth the time it takes to look at your HOA’s covenants to confirm you’re not skipping a required notice.
Umbrella liability policies. If you carry an umbrella policy for extra liability protection, it typically needs to be updated the same way your homeowner’s policy does. Without the update, you may have the same invisible mismatch layered into your broader liability coverage.
The reason these issues are so common, even among people who worked with a good attorney, is that nothing about it is urgent until there is an emergency. The deed transfer is a dramatic, official-feeling step. Calling your insurance agent to add the trust to your policy or policies feels like a minor administrative afterthought. It often gets pushed to the bottom of a to-do list and forgotten.
The Takeaway.
Signing a trust, as well as proper trust funding, is a wonderful tool to protect assets and carry out your final wishes. But a trust only protects what is properly funded into it. Proper trust funding means every institution connected to that asset knows about the change, not just the county clerk.
If you have put your home (or any other major asset) into a trust and you are not sure whether your insurance, mortgage servicer, or property tax authority ever got the memo, it’s worth a quick review so you can have those conversations, and make those changes, now instead of when you are in the middle of a claim.
If you are looking to setup a trust, and other documents, to complete your estate plan, please reach out to me at jenniferseifert@fernhavenpllc.com or schedule a Pathways Planning Session at: https://outlook.office.com/book/FernHavenEstatePlanningPLLC@FernHavenPLLC.com/?ismsaljsauthenabled
