May 25, 2021
How to Refinance a House with a Lady Bird Deed or a Trust?
How do I refinance my house?
What happens if I wanted a home equity loan?
Those are questions some people ask. And the way we owned that real estate is going to determine the best route to go.
Typically there are 2 approaches with regards to real estate that we take in our office.
One is to do a Lady Bird Deed. This is like a Beneficiary designation for your home. If you were to refinance with a Lady Bird Deed it’s very straightforward, because the deed is still in your name. This is not complicated at all because the way the Lady Bird works is it says the home is in your name, you can do what you want with it. It’s just that upon death it flows to whoever is the beneficiary of that deed.
The other way is when you have a Trust and the Trust is the owner, not the beneficiary. This is only utilized when we’re setting up an Asset Protection Trust like the Castle Trust. Where we deed the property directly into a Trust so the property would be protected from Nursing Home or Medicaid. You can sell the house and the proceeds will remain protected in the Trust.
In this situation, you need to find a mortgage company that will lend directly to the Trust. Not all companies will do this so another option is to take the real estate out of the Trust, put it back to your name, handle the refinance and put it back into the Trust.
Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.
Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.
Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.
With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.
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https://castlewealthlegal.com/home
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Episode Transcript
Refinancing
Hello, this is Chris Berry. And today we’re going to talk about refinancing your house and how that relates to having a lady bird deed versus a trust in your planning. And if you like this information, please make sure to subscribe to our YouTube channel.
Christopher Berry is a leading a state attorney and advisor in the area of retirement and legacy planning. He has been featured in publications, such as Forbes, Kiplinger’s, Crain’s Detroit and more. He’s the host of the weekly radio show and podcast, The Chris Berry Show. He’s a national thought leader as it relates to retirement and legacy planning, and has authored of the Amazon bestselling book, The Caregiver’s Legal Guide.
So a question sometimes we get asked is, how do I refinance my house? Or what happens if I want to take out a home equity loan? And the way that we own that real estate is going to determine the best route to go. And really typically there’s two approaches with regards to real estate that we take in our office. One would be to do what’s called a lady bird deed. To say the home is in your name while alive and then upon death, it avoids probate and goes to whoever you’ve named as a beneficiary, whether that’s trust or whether that’s kids. So the lady bird deed, it’s like a beneficiary designation for your home. Again, the home is in your name while you’re alive, and then upon death, it flows to whoever’s listed as a beneficiary on that deed. Now, if you were to refinance with a lady bird deed, it’s very straightforward because the deed is still in your name.
So it’s not at all complicated. There’s no additional steps. We don’t have to worry about trusts or anything because the way the lady bird deed works is it says the home is in your name. You can sell it. You can refinance it. You can do whatever you want. It’s just that upon death, it flows to either the children or the trust.
Lady Bird Deed
The other way to own property typically would be that you have a trust and the trust is the owner, not the beneficiary. That’s the big difference. And typically this would only be utilized when we’re setting up asset protection trusts like the Castle trust, where we would deed the property directly into the trust. So now it’d be protected if we need any type of nursing home or Medicaid and we can sell the house and the proceeds of the sale would remain protected in the trust. Think of it, it’s like we’re putting it into the piggy bank. We put the house under the piggy bank and we can sell the house. The proceeds would remain protected in the piggy bank.
Now in that situation, if we wanted to refinance, we’d have to find, and we can assist you with this, a company that will lend directly to the trust. Not every mortgage company will do that. So that’s why we’ve established relationships with companies that are willing to refinance inside of a trust. Your other option would be to basically unscrew the bottom of the trust, take the real estate out of the trust, put it back in your name, handle the refinance, and then fund it back into the trust. So either way there are options in terms of refinancing your house. It’s just key to understand is the house in your name currently with a lady bird deed, and then upon death goes into the trust?
If so, it’s going to be a very straightforward refi process, just like the way it would normally be in your name. Or the other option is that it might be in a trust and you either have to find a finance company or a mortgage company that will refinance on the trust, or depending on what your goals are and your situation, you may want to take it out of the trust, do the refinance, and then put it back into the trust. Either way may work. So hopefully this has been helpful. This is Chris Berry talking about refinancing strategies, depending on whether you have a lady bird deed or a trust for your real estate.
Castle Wealth Group has clients across the nation and helps families plan, protect and preserve what is important by creating a retirement and legacy blueprint.