How to Legally Fund a Living Trust with Utah Real Estate
To protect your home from probate, you must formally 'fund' your living trust by recording a new deed. The federal Garn-St. Germain Depository Institutions Act (12 U.S.C. § 1701j-3) protects you from a bank calling your mortgage due when transferring a primary residence into a revocable trust.
Step-by-Step Process to Fund Your Trust with Utah Real Estate
Creating a living trust in Salt Lake City, Ogden, or Sandy is only half the battle. If you do not legally transfer your real estate into the name of the trust, the property will still be subject to Utah's probate process when you pass away. Transferring real estate requires executing and recording a new deed, but you must be careful not to violate the terms of your existing mortgage or lose your title insurance.
Step 1: Choosing Between a Warranty Deed and a Quitclaim Deed
In Utah, there are primary ways to transfer property to a trust. A general Warranty Deed governed by Utah Code § 57-1-12 offers the broadest title protection, while a Special Warranty Deed under Utah Code § 57-1-12.5 guarantees clear title against issues arising during your ownership. In contrast, a Quitclaim Deed under Utah Code § 57-1-13 simply transfers whatever interest you have, with no guarantees. Most estate planning attorneys strongly recommend using a Warranty Deed or Special Warranty Deed to ensure your existing title insurance policy remains valid after the transfer.
Step 2: Transferring a Primary Residence
Many homeowners worry that transferring their primary residence into a trust will trigger the 'due-on-sale' clause in their mortgage, forcing them to pay off the entire loan immediately. Fortunately, the federal Garn-St. Germain Depository Institutions Act (12 U.S.C. § 1701j-3) explicitly forbids lenders from enforcing this clause when a borrower transfers residential property (containing fewer than five units) into a revocable living trust where the borrower remains the beneficiary.
Step 3: Moving Single-Family Rental Properties
If you own investment homes in St. George or West Jordan, placing them in your living trust avoids probate, but it requires an extra step. Because these are not your primary residence, the 12 U.S.C. § 1701j-3 may not provide the exact same blanket protection against a due-on-sale clause, depending on the lender. It is best practice to write a formal letter to your mortgage lender requesting written consent to transfer the rental property into your trust before recording the deed.
Step 4: Handling Multi-Family Investment Properties
If you own an apartment complex or commercial real estate with five or more units, different rules apply. These properties are often held in an LLC for liability protection. Instead of transferring the physical real estate deed into your living trust, you will execute an Assignment of LLC Membership Interest. This transfers the ownership of the LLC itself into your living trust, avoiding probate while maintaining your corporate liability shield.
Step 5: Recording the Deed at the County Office
Once the new Warranty Deed is drafted, signed, and notarized, it must be officially recorded in the county where the property is physically located. Under Utah Code § 75B-2-816(3), a recorded deed granting title to a trustee must specifically recite the trustee's name, the trustee's mailing address, and the formal name and execution date of the trust. For example, if your home is in Davis County, you will record it at the Davis County Recorder, Farmington. If it is in Utah County, you file it at the Utah County Recorder, Provo. The transfer is not legally complete until the county records the document.
How Much Does it Cost in Utah?
Having an attorney draft a Warranty Deed to fund your trust typically costs between $150 and $350 per property. Under Utah Code § 17-71-407, the county recording fee is a flat fee per document rather than based on page length ($40 in Salt Lake County and Utah County, and $45 in all other Utah counties). An additional $2 fee applies only if the deed contains more than 10 legal descriptions, along with nominal third-party fees if using e-recording services. If you attempt to draft the deed yourself using a cheap online form and make an error in the legal property description, fixing a 'clouded title' later can cost thousands of dollars in legal fees.
How Long Does the Process Take?
Drafting the deed takes just a few days. Once signed and notarized, you mail or hand-deliver it to the local county recorder's office. The county usually processes and records the deed within 1 to 2 weeks, at which point the property is officially owned by your living trust and safe from the probate courts.
Frequently Asked Questions (FAQ)
Do I have to refinance my mortgage to put my house in a trust?
No. You simply transfer the title of the home into the trust. The mortgage stays exactly as it is, in your personal name, and you continue making your monthly payments as usual.
Will transferring my house affect my homeowner's insurance?
You must notify your homeowner's insurance provider after the transfer. They will generally add your revocable living trust as an 'additional insured' on your policy at no extra cost, ensuring your coverage remains intact.
Can I sell a house if it is in my living trust?
Yes, absolutely. Because it is a revocable trust and you are the trustee, you have full authority to sell, refinance, or rent the property just as you did before it was in the trust.
What happens if I forget to put a property into the trust?
If a property is left out of the trust, it will likely have to go through the Utah probate process. However, if you have a 'Pour-Over Will', it acts as a safety net to direct the probate judge to move the forgotten property into your trust eventually, though it still requires court time and fees.
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