5. What if I presently have a mortgage against my home? Will transferring the home to a revocable living trust or a land trust allow the lender to call the loan due (meaning that the lender can demand full immediate payment of the loan)?
A 1982 federal law (the Garn/St. Germain Depository Institutions Act of 1982 – 12 U.S.C. section 1701j-3) states that you may transfer your principal residence to a trust and you will not have to pay off the loan as long as (a) you continue to reside in the home as your principal residence, (b) you are the beneficiary of the trust.
6. What if I presently have a mortgage against the property which is not my principal residence (such as a vacant lot, commercial real estate, or a rental property), and I transfer the property into a trust? Can the lender demand that I pay off the loan?
If you transfer property to your trust which isn’t your principal residence, then hypothetically the lender can demand full payment. I haven’t heard of this happening so far, but it is a possibility. If you desire, you can contact the lender and explain what you plan to do, and ask the lender to sign a document stating that the lender won’t demand full payment if you transfer the property into a revocable trust (or a land trust).
7. What if we decide to refinance and the property is in a revocable living trust or a land trust?
If you refinance, the lender will probably want you to take the property out of trust before you refinance – which is done by you signing a deed and recording the deed with the county recorder. Then after you complete the refinance, you can put the property back into trust by signing another deed and recording that deed. This of course does cost some money to have the deeds prepared and record the deeds.