Refinancing and Title in Trust

If you own a home in Atlanta and you’ve placed it inside a trust, you may be wondering what happens when you want to refinance. Can you do it? Will the lender cooperate? What does Georgia law say about all of this? These are real questions that homeowners face every day, and the answers matter a lot for your estate plan. At Slowik Estate Planning, located in Atlanta, Georgia, we help clients understand how their trust works with their real estate, including what to expect when a refinance comes up. This page walks you through what you need to know about refinancing and title in trust in Georgia.

Table of Contents

• Why Homeowners Place Their Property in a Trust
• How Title in Trust Affects the Refinancing Process
• The Due-on-Sale Clause and Federal Protections
• What Happens After the Refinance Closes
• Irrevocable Trusts and Refinancing: A Harder Path
• Working With Slowik Estate Planning on Trust and Title Issues
• FAQs About Refinancing and Title in Trust in Atlanta, Georgia

Why Homeowners Place Their Property in a Trust

Before we talk about refinancing, it helps to understand why people put their homes in a trust in the first place. A revocable living trust is one of the most common estate planning tools used in Georgia. When you create one, you transfer your home’s title into the trust. You typically name yourself as the trustee and primary beneficiary. You stay in control of the property during your lifetime.

The big benefit? The revocable trust bypasses the probate process for all assets in it when you pass away, and the revocable trust becomes irrevocable upon your death. That means your family avoids the time and cost of probate court when you’re gone. That’s a meaningful benefit for many Atlanta families.

Under the Revised Georgia Trust Code of 2010, found at O.C.G.A. Title 53, Chapter 12, trustees are granted broad authority to manage trust assets. Article 13 of the Code (O.C.G.A. §§ 53-12-240 through 53-12-292) governs the administration of trusts and gives trustees the power to deal with trust property, including real estate. This legal framework supports a trustee’s ability to manage, maintain, and in many cases, refinance property held in trust.

People also use trusts to plan for incapacity. Living trusts are usually drafted to include a back-up (or successor) trustee who will manage your trust in the event you die or become incapacitated. So if you become ill or unable to manage your affairs, a successor trustee can step in without court intervention. That kind of protection is valuable, and it’s one reason why working with an estate planning attorney in Atlanta to set up your trust correctly from the start is so important.

Trusts can also serve other purposes beyond real estate. They can hold bank accounts, investments, and even personal property. Some clients even use them to plan for their animals through pet guardianships, ensuring their pets are cared for if something happens to them.

How Title in Trust Affects the Refinancing Process

Here’s where things get practical. When your home is titled in the name of your trust, the lender sees the trust, not you personally, as the property owner. That changes how the refinancing process works. Holding a property title in a trust’s name introduces specific requirements from mortgage lenders. Most lenders will not refinance a property while the title is held by a trust.

This doesn’t mean refinancing is impossible. It just means you need to plan ahead. The short answer is yes, you can refinance a mortgage on a property held in trust, with some additional steps. With a revocable living trust, since you still control assets in a revocable trust, you can refinance the mortgage in your own name as an individual. The process is the same as if the property was not in a trust.

The most common path for homeowners with a revocable trust is to temporarily remove the property from the trust, complete the refinance, and then transfer the title back into the trust. To meet the lender’s requirement, you must transfer the property title from the trust to your individual name. This is accomplished by preparing and recording a new deed, such as a quitclaim or grant deed, which formally conveys the property from one party to another. The new deed must identify the trust as the “grantor” and you as the “grantee,” and it must include the property’s full legal description from the existing deed.

In Georgia, transferring real estate into a trust requires recording a new deed with the county recorder’s office where the property is located. The same rule applies when you move property out of the trust temporarily for a refinance. This step must be done correctly and recorded properly to be legally effective.

The Due-on-Sale Clause and Federal Protections

One concern many homeowners have is whether moving their property in and out of a trust will trigger the due-on-sale clause in their mortgage. This clause lets a lender demand full repayment if the property is transferred. It sounds alarming, but federal law provides important protection here.

Federal law provides important protection for homeowners. The Garn-St. Germain Depository Institutions Act of 1982 specifically prevents lenders from enforcing due-on-sale clauses in certain situations, including transfers to a living trust where the borrower is a beneficiary.

This means that when you transfer your primary residence into a revocable living trust and you remain a beneficiary, the lender cannot call your loan due. For homeowners in Georgia, the Garn-St. Germain Act provides reassurance that transferring a primary residence into a revocable living trust is a viable strategy, even when there is an outstanding mortgage. This legal protection means that you can continue making mortgage payments, and there is no need to refinance or pay off the mortgage simply because the title is being transferred.

However, this protection has limits. Unlike revocable trusts, transferring a home into an irrevocable trust could trigger a due-on-sale clause. This happens because the borrower relinquishes ownership, which may be interpreted as a significant ownership change under the mortgage agreement. If you’re considering an irrevocable trust, you need to speak with an attorney before making any moves with your property title. It’s still important to check with your specific lender before transferring a mortgaged property into any trust. Some lenders may have additional requirements or paperwork to complete, even though they cannot legally enforce the due-on-sale clause in these protected situations.

What Happens After the Refinance Closes

This is the step that people most often forget, and it can create serious problems. Once your refinance closes, you must transfer the property’s title back into the trust. Skipping this step defeats the entire purpose of having a trust in the first place.

After the refinance closing is complete, you must transfer the property’s title back into the trust. Failing to complete this step would leave the property outside of the trust, negating the asset protection and probate avoidance benefits it was created for. This common oversight can create significant legal and financial problems for your heirs.

The process of returning the property to the trust mirrors its removal. A new deed must be prepared where you, as the individual, are the “grantor” and the trust is the “grantee.” This new deed must also be signed, notarized, and recorded with the county office to be legally effective.

Think of it this way: your trust is only as strong as what’s inside it. If your home sits outside the trust at the time of your death, your family may have to go through probate to deal with it. That’s exactly what you were trying to avoid. Two deeds will need to be prepared and recorded with your county registrar or recorder. The first deed takes your property out of the trust, and the second one puts it back into the trust. Make sure the second deed is recorded immediately after your refinance is completed.

This is why working with an attorney during a refinance, not just at the time you create the trust, is so valuable. The trust administration process involves keeping your trust funded and properly maintained over time, and refinancing is one of those moments when attention to detail really counts.

Irrevocable Trusts and Refinancing: A Harder Path

If your property is held in an irrevocable trust, refinancing becomes more complicated. You can’t simply remove the property and put it back in your name. The whole point of an irrevocable trust is that you’ve given up ownership. That’s what gives it asset protection and certain tax benefits.

Under O.C.G.A. § 53-12-40 through § 53-12-45 (Article 3 of the Revised Georgia Trust Code), modifying or revoking an irrevocable trust is generally not permitted without court approval or consent from all beneficiaries. So moving property out of an irrevocable trust for a refinance is not a simple administrative step. It may require legal action.

That said, refinancing through the trust itself may still be possible. You can still refinance the mortgage on an irrevocable trust, but the process is more complicated. The loan application has to be in the name of the trust, not yours as an individual. The key is finding a lender who is willing and able to refinance a mortgage held in an irrevocable trust. This may require more shopping around to lenders who understand trust loans.

It’s also worth understanding the tax side of irrevocable trusts. Under IRS Rev. Rul. 2023-2, assets held in an irrevocable grantor trust that are not included in the grantor’s gross estate under Chapter 11 of the Internal Revenue Code do not receive a step-up in basis at the grantor’s death under Section 1014. This means trust beneficiaries who inherit appreciated property from an irrevocable grantor trust may face capital gains taxes that a revocable trust beneficiary would not. This tax consideration is one more reason to think carefully about which type of trust is right for your situation before placing real estate into it.

If you have property in an irrevocable trust and need to refinance, reach out to Slowik Estate Planning in Atlanta, Georgia. We can help you understand your options and work through the process properly.

Working With Slowik Estate Planning on Trust and Title Issues

Refinancing a home held in trust is manageable when you have the right guidance. The key is knowing the steps, following Georgia law, and not cutting corners on the deed work. Whether you have a revocable or irrevocable trust, working with an attorney who understands both estate planning and real estate title issues in Georgia makes the process much smoother.

At Slowik Estate Planning, we work with Atlanta-area homeowners to make sure their trusts are properly funded and maintained over time. That includes helping you understand what to do when a refinance comes up. We can review your trust documents, advise on the deed transfers needed, and make sure your property goes back into the trust after closing.

Under O.C.G.A. § 53-12-200 through § 53-12-221 (Article 11 of the Revised Georgia Trust Code), trustees carry fiduciary duties to act in the best interest of the trust and its beneficiaries. Making sure trust property is properly managed, including during a refinance, is part of that duty. We can help trustees understand and meet those obligations.

We also help clients who are just getting started with estate planning. If you don’t yet have a trust, now is a good time to think about one. An Atlanta estate planning lawyer at our firm can walk you through your options, explain how a trust works with your mortgage, and draft a plan that fits your goals. Contact Slowik Estate Planning today to schedule a consultation. Our office is located in Atlanta, Georgia, and we are ready to help you protect your home and your legacy.

FAQs About Refinancing and Title in Trust in Atlanta, Georgia

Can I refinance my home if it’s held in a revocable living trust in Georgia?

Yes, you can refinance a home held in a revocable living trust in Georgia. The most common approach is to temporarily transfer the property out of the trust into your individual name, complete the refinance, and then transfer the title back into the trust. It is critical that you complete that final step and record the deed returning the property to the trust. If you skip it, your home will be outside your trust at the time of your death, and your family may have to go through probate to deal with it. Working with an estate planning attorney during this process helps ensure nothing gets missed.

Does putting my home in a trust trigger the due-on-sale clause on my mortgage?

Generally, no. The Garn-St. Germain Depository Institutions Act of 1982 is a federal law that prevents lenders from enforcing the due-on-sale clause when you transfer your primary residence into a revocable living trust and you remain a beneficiary of that trust. However, this protection applies specifically to revocable trusts and primary residences. Transferring a home into an irrevocable trust is a different situation, and it may trigger the clause because you are giving up ownership. Always review your mortgage documents and consult an attorney before making any title transfers.

What does Georgia law say about a trustee’s authority to manage real estate in a trust?

Under the Revised Georgia Trust Code of 2010, specifically O.C.G.A. Title 53, Chapter 12, trustees have broad authority to administer trust assets. Article 13 (O.C.G.A. §§ 53-12-240 through 53-12-292) governs trust administration and supports a trustee’s ability to manage, maintain, and deal with real property held in the trust. Trustees also carry fiduciary duties under Article 11 (O.C.G.A. §§ 53-12-200 through 53-12-221), meaning they must act in the best interest of the trust and its beneficiaries when making decisions about trust property, including decisions related to refinancing.

What happens to the step-up in basis when property is held in an irrevocable trust?

This is an important tax question. Under IRS Rev. Rul. 2023-2, assets held in an irrevocable grantor trust do not receive a step-up in basis at the grantor’s death if those assets are not included in the grantor’s gross estate under Chapter 11 of the Internal Revenue Code. That means trust beneficiaries who later sell appreciated property from an irrevocable grantor trust may owe capital gains taxes based on the original cost basis rather than the fair market value at the time of the grantor’s death. This is a meaningful tax consideration when deciding between a revocable and irrevocable trust structure for real estate.

Do I need an attorney to transfer my home back into the trust after refinancing?

While Georgia law does not require you to use an attorney for deed transfers, it is strongly advisable to work with one. The deed must be properly drafted, signed, notarized, and recorded with the county recorder’s office where the property is located to be legally effective. Errors in the deed, or failing to record it at all, can leave your property outside the trust and expose your estate to probate. An estate planning attorney can prepare the deed correctly, make sure it is recorded promptly after closing, and confirm that your trust is properly funded going forward.

More Resources About Real Estate Trust Planning

• Putting Your House in a Trust in Georgia
• Mortgage and Due on Sale Concerns With Trusts
• Homestead Exemptions and Trusts