Putting Real Estate Into a Trust: Houses, Condos and Multi-Family Homes

For most New York families, the home is the most valuable asset and the hardest one to deal with after death. If a home is not in a trust, the family usually cannot sell it until a court authorizes them to. This article covers houses, condos and multi-family homes. Co-ops follow very different rules and are covered in the next article.

Why Is a Home the Most Important Asset to Put in a Trust?

A home titled in your own name usually has to go through probate at your death. Until the court grants authority, it cannot be sold or transferred, yet property taxes, insurance, utilities and the mortgage still must be paid;
If heirs live overseas, signatures, notarization and authentication take longer;
If the home is in another state, a second court proceeding there may be required (see Part 15).

How Is a Home Put Into a Trust?

Prepare a new deed from you (the current owner) to “you, as trustee of your trust”;
Sign and acknowledge it before a notary;
File the transfer forms, including the New York State real estate transfer tax return and the real property transfer report. In New York City, the city transfer tax form is also required;
Record the deed: in New York City with the City Register (through ACRIS); elsewhere with the County Clerk;
Notify your insurer, lender and tax authorities (see below).

Is There a Transfer Tax?

A transfer into your own revocable trust usually involves no purchase price and generally does not trigger transfer tax. But even when no tax is due, the forms must still be filed, and recording fees must be paid.

Can a Home With a Mortgage Go Into a Trust?

Yes. Many people worry that the bank will demand full repayment because the owner “changed.” Federal law (the Garn-St Germain Act, 12 U.S.C. §1701j-3(d)(8)) says that for residential property with one to four units, a lender may not call the loan when the borrower transfers the home into a living trust in which the borrower remains a beneficiary and continues to live there. We still recommend notifying the lender.

Will I Lose STAR or Other Property Tax Benefits?

Generally, as long as you (the beneficiary) continue living in the home, STAR, the senior citizens’ exemption and veterans’ exemptions can usually continue. You may need to update your information with the local assessor or the New York State Department of Taxation and Finance. It is best to confirm before transferring.

Is My Title Insurance Still Valid?

Newer owner’s title insurance policies usually continue to cover a home transferred into your own trust. Older policies may need an endorsement. Check with your title insurer before the transfer.

Do I Need to Change My Homeowner’s Insurance?

Yes. Ask your insurer to add the trust (or you “as trustee”) as a named or additional insured, so a future claim isn’t complicated by a mismatch between the policy and the owner of record.

Is a Condo Any Different?

A condo is true real property, so the basic process is the same as for a house. But many condo bylaws give the board a right of first refusal on transfers. A transfer to your own trust is usually not affected, but the title company may ask for a waiver letter from the board. You can request one from the managing agent in advance.

What About Rental and Multi-Family Properties?

Leases, security deposits and rent collection will now be handled in your capacity as trustee;
A trust does not shield you from landlord liability. If a tenant is injured and sues, a revocable trust offers no protection. Rental properties are often placed in an LLC first, with the LLC interest then placed in the trust, which combines liability protection with probate avoidance.

Isn’t It Simpler to Add My Child’s Name to the Deed?

Many people do this, but the risks are significant:

It is a gift of part of the house to your child and may require a gift tax return;
Your child’s share loses the step-up in cost basis at your death, which can mean a much larger capital gains tax when the house is sold;
Your child’s debts, divorce or lawsuits can reach the house;
You will need your child’s signature to sell or refinance;
If you later apply for Medicaid, it may count as a gift within the five-year look-back.

In most cases, a trust is safer and more flexible than adding a name to the deed.

Doesn’t New York Now Allow Transfer on Death Deeds?

Yes. Since July 19, 2024, New York has allowed a transfer on death (TOD) deed (Real Property Law §424): the property passes directly to the people you name at your death, without probate. It is simple and inexpensive, but it has limits:

It does not help if you become incapacitated;
It applies only to real property and generally does not work for co-ops;
It gets complicated if a beneficiary is a minor, has special needs or dies before you;
In some situations, creditors of the estate (including government agencies seeking reimbursement) may still reach the property;
It cannot control when and how your children receive the property, as a trust can.

For a simple family with one home and adult children as beneficiaries, a TOD deed can be an option. For more complicated situations, a trust is usually the better fit.

After the Home Is in the Trust, What About Selling or Refinancing?

Selling: The trustee signs the deed. The title company will usually ask to see the trust or a trust certification;
Refinancing: Some lenders require the home to be deeded out of the trust before closing and deeded back afterward. Don’t forget to deed it back. This is a common mistake.

What If the Goal Is Medicaid Planning?

Then the right tool is not a revocable trust but an irrevocable Medicaid asset protection trust. The five-year look-back starts when the home is transferred. When properly designed, you can keep living there, keep your property tax benefits, and your children can still receive a step-up in basis at inheritance. (See Part 5.)

The Bottom Line

A home is the most valuable trust asset and the one that needs the most care. Deed, forms, mortgage, insurance, property tax: none can be skipped.

Attorney’s perspective

When moving a home into a trust, I review the mortgage, property tax benefits, title insurance and homeowner’s insurance together, and we prepare and record the deed. For rental property, I first consider whether an LLC is needed for liability protection before deciding the trust structure. If you are thinking of adding a child to your deed, please talk with me first.

For advice about your own family’s situation, call +1 718-218-5805 or schedule a consultation. We meet clients in Flushing and Manhattan, in English or Chinese.

Series overview

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. For advice about your situation, please contact us.

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