Transferring Your Primary Residence into a Trust for Estate Planning: Understanding the Impact on Your Mortgage

As an Estate Planning and Elder Law attorney, I’m often asked about the impact of transferring a mortgaged property into a revocable or irrevocable trust. Most mortgages contain what is called a “due on sale” clause, which means that when you transfer a mortgaged property out of your name, the entire mortgage balance is due. This can create a significant issue when it comes to estate planning, as transferring a property into a trust is often a key part of protecting your assets and planning for the future.

However, the good news is that federal law specifically prohibits a mortgage holder from exercising a “due on sale” clause on residential real property containing less than five dwelling units or on a cooperative apartment unit when the property is transferred to a spouse or children of the owner, or a lifetime revocable or irrevocable trust where the borrower retains the right to occupancy. This means that if you transfer your primary residence into a revocable or irrevocable trust for estate planning purposes, you will not activate the “due on sale” clause in your mortgage.

The Garn-St Germain Depository Institutions Act of 1982 applies to these transfers of a residence in an irrevocable trust where the home is preserved for the grantor and is a lifetime income beneficiary. I have yet to see a bank even flirt with trying to call a mortgage due in this situation.

It’s important to note that transferring a mortgaged property into a trust can still have other legal and financial implications that should be considered carefully with the help of an experienced attorney. However, the fear of activating the “due on sale” clause should not be a barrier to creating a trust as part of your estate planning strategy.

If you have questions about transferring your primary residence into a revocable or irrevocable trust, I encourage you to reach out to our team at McIntyre Elder Law for a free consultation. You can call us at 1-888-999-6600 or schedule a consultation online at Let us help you protect your assets and plan for the future without fear of unexpected mortgage issues.

Greg McIntyre
Estate Planning & Elder Law Attorney
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Greg McIntyre, JD, MBA

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Greg McIntyre, founder of McIntyre Elder Law, is more than just an attorney. As a Navy Veteran, father to six kids, and a loving husband, he values family deeply. This drives his commitment to helping clients safeguard their futures and pass down legacies.

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