13 Apr A Cautionary Tale: Do You Know Where Your Deed Is?
One of our clients created her Living Trust some 12 years ago, and updating her Trust was a 2016 New Year’s resolution. The update was long overdue; since its creation, she’s invested in an IRA, a life insurance policy and some other brokerage accounts.
She was going to wait until she completed a REFI of her condo—the bank had reached out to her, so she decided to proceed with this and lower her monthly mortgage payment. Bank of America had written her original loan, but they’d sold their mortgage processing to another provider that was based in Florida–never a good sign.
REFI turns into Probate
Our self-employed client has built a successful business, but the bank kept asking for more evidence of her earnings. In addition to bank statements and the usual financial documents, they wanted a copy of her business card, then her business license. They were finally satisfied that she was financially stable and were scheduling the closing when they called to tell her that, rather than being able to do a REFI, she was going to have to go through Probate.
In 2010, our client had done another REFI
She’d started her business in 2009 and needed a co-signer on the loan, and her stepfather in Florida was happy to help out. The REFI was completed; both her name and that of her stepfather were on the new deed. The problem? Stepfather was never removed from title, and the deed was never transferred back into her Living Trust.
Stepfather died in 2014; probate double-whammy
Her stepfather died in 2014, and his name is still on the deed. In order to clear the deed, our client is going to have to go through Probate—in the state of Florida. Forget the REFI or updating her Living Trust—she is now facing Probate in Florida, where nothing works easily or well; and then, adding insult to injury, she will need to open an “ancillary” probate in California.
Trust Transfer Deed moves property out of and back into your Living Trust
Low interest rates over the last few years have created a run on REFIs. If you own real estate and the deed has been moved into your Living Trust, it must be moved out of the Trust in order to do the REFI, via a Trust Transfer Deed. But here’s the catch—it also needs to be moved back into the Trust. In many cases, this last step never takes place.
This unfortunate situation is a wakeup call
This situation is unfortunate and easily preventable, yet it’s not uncommon. REFI madness has created open season on those who are eligible to refinance their homes or other properties. Financial institutions are eager to get those properties out of the Trusts so they can write loans, but they’re not at all concerned with ensuring that deeds are moved back into them once the transaction is complete. It’s ultimately up to you to make sure that your deed is transferred back into your Living Trust. The consequences? If you died, your family would be going through Probate, just like our client.
If you have questions about the whereabouts of your deed or how to get this into your Living Trust, contact one of our three Bay Area offices. This is a simple process that can often be accomplished in a day.