Can I Continue to Live in a House That Is in a Trust?

Tenants and homeowners can live in a home named in a trust.

Placing real estate in a living trust requires the trust creator ("trustee") to contact the local tax authority where the property is located in order to change the deed to reflect the name of the trust. This process of transferring the property title into the trust does not prohibit anyone from living in that house; it simply ensures that the trust owns the property and is excluded from probate court after the trustee dies.

Placing Houses in a Trust

When a home's deed of ownership is put into a new living trust, the house is not assigned to any heirs or beneficiaries. The trustee is only ensuring that the house is owned by the trust. This formal process is known as "funding the trust." The trustee must fill out the appropriate property-title paperwork for the state where the property is located, such as a quitclaim deed, which will state that "John Smith, as trustee for the John Smith Trust," continues to have legal rights over his home. The trustee, homeowner and anyone currently living in the house can continue to do so without legal repercussions until the trustee dies.

Property Acquired After a Trust Is Established

A trustee may establish a trust and then proceed to purchase property after the trust's date of creation. In such a case, the property owner's real estate agent can create a deed of ownership during the transaction process that looks exactly like the one for the property that's already in the trust. As long as the trust is funded with the new property's correctly titled deed, the home is safe from the probate court system after the trustee's death. However, certain legal situations can place the tenancy of anyone living inside the home at risk.

Beneficiaries and Eviction

If a nonbeneficiary is living in a home named in a trust, when the trust assets are distributed all beneficiaries have legal authority to evict any residents inside the home. However, a living trust must be properly funded with correct paperwork in order for heirs to receive bequeathed items assigned by the deceased trustee. If the trustee neglected to make important changes to the deed, such as removing a former spouse from the deed and filing other property paperwork, the ex-spouse may have superseding rights over the current beneficiaries and can claim the home.

Creditor Considerations

A home that is named in a trust is only excluded from the lengthy probate court process. If the homeowner/trustee is delinquent in making mortgage payments, the home is not safe from creditors. Mortgage companies can take legal action to foreclose on the property and evict anyone living inside. Even if the trustee has named an individual as a beneficiary of the home in the trust, the beneficiary can still be evicted from the property if it is in foreclosure status when the trustee dies.

References

• NOLO: "Make Your Own Living Trust"; Dennis Clifford; February 2011
• NOLO: Online Legal Forms FAQ

Resources

• American Bar Association: Living Trusts