Estate Planning for unmarried couple

[TrustUser]

thanks tm, but that is just as i thought. just about all typical rlts, do this. i am not arguing that you should not tell people about it. but the overwhelming percentage of people making rlts, are simply placing their assets in trust, so that they can be distributed to their kids, or ultimate beneficiaries. i just wanted to make sure that there wasnt something that i was missing.

 

[TrustUser]

in fact, i might even go a step further and argue that it is not possible to do what you are suggesting, if the grantor has the right to revoke the trust ?

 

[TrustUser]

a quick note - you first talk about a transfer of rights of occupancy. and then you simply say change in occupancy. i am assuming that the second iteration was meant to say change in rights of occupancy.

if you are claiming that the person has to actually reside in the property, then i think you are incorrect. a person could certainly transfer into a trust his own property, whether he lives in it or rents it out - without triggering the due on sale clause.

 

[Taxing Matters]

in fact, i might even go a step further and argue that it is not possible to do what you are suggesting, if the grantor has the right to revoke the trust ?

Not possible to do what?

a quick note - you first talk about a transfer of rights of occupancy. and then you simply say change in occupancy. i am assuming that the second iteration was meant to say change in rights of occupancy.

I simply quoted the statute and former regulation. The regulation, though no longer in effect, was provided to give some additional context to the requirement in the statute. The key provisions of the statute are that the transferor/mortgagor must be a beneficiary of the trust and that the transfer to the trust must not relate to a change in the rights to occupancy of the property.

if you are claiming that the person has to actually reside in the property, then i think you are incorrect. a person could certainly transfer into a trust his own property, whether he lives in it or rents it out - without triggering the due on sale clause.

I said no such thing. The focus is whether the transfer to the trust related to a change in the rights to occupancy.

While most transfers to a revocable living trust will meet the provisions of the Garn-St. Germain Act, it is possible for such a transfer to fail to meet it. That's why I mentioned it. Again, living trusts can be set up to do a lot of different things and depending on what you do you might fail to meet the requirements to avoid a due on sale clause trigger. The common revocable living trust that is simply a will substitute and nothing more likely isn't going to have that problem. But there are trusts that could create that problem.

 

[TrustUser]

re-read what you said. your second iteration of the occupancy mentioned nothing about rights. but i figured you meant that, so i was verifying it

"by which the lender will be assured of timely notice of any subsequent transfer of the beneficial interest or change in occupancy."

this statement would be interpreted as change in occupancy, as opposed to the rights of occupancy.

 

[TrustUser]

you said "not possible to do what"

earlier, there were 2 points you made - borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property

and what i am saying is that i would argue the point that it is not possible to do either one of those things IF YOU CAN REVOKE THE TRUST.

which is why i am also saying that it is a somewhat moot point. and my original statement of it being a needle in a haystack is quite correct.

or to put it another way, i doubt if there is 1 in a million revocable living trusts that do not qualify for the "due on sale clause"

 

[Taxing Matters]

and what i am saying is that i would argue the point that it is not possible to do either one of those things IF YOU CAN REVOKE THE TRUST.

Certainly you could do either of those things with a revocable trust. The devil is in the details of the trust.

or to put it another way, i doubt if there is 1 in a million revocable living trusts that do not qualify for the "due on sale clause"

There isn't enough data out there to know. But though most do qualify for the exception because they are using a lawyer to draft them or are using forms or software that are properly drafted it is nonetheless important that people understand that not just any transfer to a trust will be safe from a lender triggering a due on sale clause. It is possible to screw it up.

 

[TrustUser]

well, i would take you to court on it !!

if the grantor is the only one who can revoke the trust, and call it all back - the grantor cant transfer the rights to someone else

when you die, is when the trust really comes into effect

as long as you retain control (i.e. being able to revoke it), you cant transfer your rights

the feds would still consider it to be part of your estate, not someone else's

in any case, we are still talking about the needle in the haystack