Putting your home in a trust is one of the most common estate planning moves in the country, and the reason is simple: a house held in a properly funded trust passes to your heirs without probate, a court process that can consume 3% to 7% of an estate’s value and drag on for months or years. Whether the strategy actually works comes down to three things — which type of trust you use, how you handle the deed, and what you do afterward about your mortgage, insurance, and taxes.
Revocable or Irrevocable
The first decision is the biggest. A revocable living trust lets you change the terms, swap beneficiaries, or dissolve the trust entirely at any point during your lifetime. You typically name yourself as both trustee and initial beneficiary, which means you keep full control of the property and go on living in it exactly as before. Because you retain that control, the home is still counted as part of your taxable estate and remains reachable by your creditors. The tradeoff is straightforward: a revocable trust is a probate-avoidance tool, not an asset-protection tool.1Federal Long Term Care Insurance Program. Types of Trusts for Your Estate: Which Is Best for You?
An irrevocable trust works differently. Once you transfer your home into one, you give up ownership and control. You cannot unilaterally change the terms or take the property back. That loss of control is the point: because the home is no longer legally yours, it generally falls outside your taxable estate and beyond the reach of your personal creditors.1Federal Long Term Care Insurance Program. Types of Trusts for Your Estate: Which Is Best for You? Irrevocable trusts are more powerful and far less forgiving. Most homeowners who simply want to keep the family home out of probate choose a revocable living trust.
What a Trust Does That a Will Cannot
A will has to go through probate before your heirs receive anything. A judge validates the will, creditors get a chance to file claims, and the court oversees distribution. Real estate can make probate especially slow because the property may need to be appraised, maintained, and eventually transferred by court order. A home in a revocable trust bypasses all of that. When you die, your successor trustee follows the trust’s instructions and transfers the property to your beneficiaries without court involvement.
Trusts also handle a problem wills cannot touch: incapacity. If you become unable to manage your affairs, your successor trustee steps in and handles the property on your behalf. Without a trust, your family would likely need to petition a court for a conservatorship or guardianship just to pay the mortgage or keep up the house. That is expensive and public.
Privacy is the third advantage. Probate records are public; anyone can look up what you owned and who inherited it. Trust distributions happen outside the court system.
Taxes
Property Tax
Transferring your home into a revocable living trust generally does not trigger a property tax reassessment, because you are still treated as the owner for tax purposes. Rules vary by jurisdiction, and some counties require you to refile for your homestead exemption with the trust listed as the property owner. Missing that step can cost you the exemption until you fix it. Check with your local tax assessor before and after the transfer.
Capital Gains When You Sell
Federal law lets you exclude up to $250,000 of gain ($500,000 for married couples filing jointly) when you sell a home you have owned and lived in for at least two of the five years before the sale. If your home is in a revocable living trust, you are treated as the owner for that two-year test, so the exclusion still applies as long as you actually lived in the home for the required period.2eCFR. 26 CFR 1.121-1 – Exclusion of Gain From Sale or Exchange of a Principal Residence
Step-Up in Basis at Death
When someone inherits property, the tax basis usually resets to the home’s fair market value at the date of death. That step-up can erase decades of appreciation for capital gains purposes. A home in a revocable living trust qualifies for this step-up because the property is still included in your taxable estate.3Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent
Irrevocable trusts can be a different story. If the trust is designed to remove the home from your taxable estate, the property may not receive a step-up when you die. Revenue Ruling 2023-2 clarified that assets in an irrevocable grantor trust that are not included in the grantor’s gross estate do not get this favorable basis adjustment. Beneficiaries could face a larger capital gains bill when they eventually sell. This tradeoff catches people off guard.
Estate and Gift Tax
For 2026, the federal estate and gift tax exemption is $15,000,000 per person.4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Most homeowners will never owe federal estate tax regardless of what kind of trust they use. For those with combined assets approaching or above that threshold, an irrevocable trust can remove the home’s value from the taxable estate.
Transferring a home to an irrevocable trust is treated as a gift for federal tax purposes. If the home’s value exceeds the $19,000 annual gift tax exclusion per recipient, you must report the transfer on IRS Form 709.5Internal Revenue Service. Instructions for Form 709 You will not owe gift tax unless your cumulative lifetime gifts exceed the $15,000,000 exemption, but the reporting requirement applies regardless.4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Revocable trust transfers are not completed gifts and carry no gift tax reporting requirement.
Your Mortgage
If your home has a mortgage, you might worry the transfer will trigger the loan’s due-on-sale clause. Federal law prevents lenders from enforcing that clause when you transfer residential property with fewer than five units into a trust where you remain a beneficiary and the transfer does not involve giving up your right to live in the home.6Office of the Law Revision Counsel. 12 U.S.C. 1701j-3 – Preemption of Due-on-Sale Prohibitions Notify your lender as a practical matter, but the loan cannot be accelerated.
Refinancing is where the inconvenience lives. Many lenders will not refinance a mortgage on a property titled in a trust’s name. The typical workaround is a three-step process: transfer the home back into your personal name with a quitclaim deed, complete the refinance as an individual, then transfer it back into the trust with another deed. Each transfer means recording fees and paperwork. Some lenders will refinance with a revocable living trust on title, so ask before assuming you need the extra steps.
Insurance and Title
When the trust becomes the legal owner, your homeowner’s policy needs to reflect that. The standard approach is to have the trust added as an additional named insured on your existing policy, which preserves your personal liability coverage and coverage for your belongings while also covering the trust’s ownership interest. If you make the trust the sole named insured instead, you may need a separate renter’s policy for your personal property and liability. Call your insurer before the transfer. A claim filed after a change your insurer does not know about can be denied.
Your existing title insurance policy may not automatically cover the trust after a deed transfer, particularly if you used a quitclaim deed. Many title insurers will extend coverage to a revocable trust transfer at no charge if you notify them, but this is not universal. Ask your title company for written confirmation that coverage continues. If it lapsed, you may need a new policy.
Medicaid and Long-Term Care
A revocable trust provides no Medicaid protection, because the assets are still legally yours. If long-term care costs are a concern, the tool is an irrevocable trust, and the timing rules are strict. Medicaid has a five-year look-back: when you apply for long-term care benefits, the program reviews all asset transfers made in the five years before your application. A transfer inside that window creates a penalty period during which you are ineligible.
If the transfer happened more than five years before you apply, the home in the irrevocable trust is generally not counted as your asset for eligibility, and it is shielded from Medicaid estate recovery after your death. People who wait for a health crisis are almost always too late. If Medicaid planning is a goal, the irrevocable trust has to be in place years before care is needed.
How the Transfer Actually Happens
The trust agreement is the legal document that establishes the trust and its rules. You decide on a successor trustee, who takes over when you die or become incapacitated, and name the beneficiaries who will ultimately inherit the home. You will also need your current deed, because it contains the legal description of the property that has to be carried into the trust agreement and the new deed. The successor trustee will be responsible for gathering and valuing trust assets, maintaining the property, handling required filings, and distributing the home. A family member is the common choice; a professional trustee or trust company is worth considering if family dynamics make a neutral party safer.
Once the trust agreement is signed, you prepare a new deed transferring the property from your name to the trust. A quitclaim deed is the usual choice for a revocable trust transfer, because you are effectively conveying property to yourself as trustee and the guarantees of a warranty deed are unnecessary. The deed must be signed and notarized. Notarization typically costs $5 to $15 per signature.
The notarized deed is then recorded at the county recorder’s or land records office where the property sits. Recording makes the transfer part of the public record and legally establishes the trust as the title holder. Recording fees vary but generally run from around $15 to over $150.
Attorney fees for drafting a revocable living trust generally run $1,000 to $5,000, with a national average around $2,500. Estates with business interests or complex assets can push fees higher. Those fees usually cover the trust agreement itself and may not include deed preparation and recording, which can add a few hundred dollars. Set against probate costs of 3% to 7% of an estate’s value, the upfront spend often pays for itself many times over.
What a Trust Will Not Do About Creditors
A revocable living trust does not shield your home from creditors during your lifetime. Because you keep full control, courts treat the trust assets as yours, and creditors can reach them to satisfy your debts. After your death, creditors still have a window to file claims against trust assets before they are distributed to beneficiaries. The window’s specifics vary by state, but the point stands: revocable trusts are not asset protection.
Irrevocable trusts offer real creditor protection because the assets no longer belong to you. Once the home is in an irrevocable trust, personal creditors generally cannot reach it. That protection comes at the cost of giving up ownership and control, and it is subject to the same look-back concerns that apply in Medicaid planning.
A Note on Qualified Personal Residence Trusts
A qualified personal residence trust, or QPRT, is a specialized irrevocable trust built for homes. You transfer the home into the trust but keep the right to live in it for a set number of years. At the end of that term, ownership passes to your beneficiaries. The taxable value of the gift is calculated at the time of transfer and reduced by the value of your right to live there during the trust term. The longer the term, the smaller the taxable gift.
The catch is serious. If you die before the trust term ends, the home is pulled back into your taxable estate and the planning benefit disappears. If you survive the term and want to keep living there, you have to pay your beneficiaries fair market rent. A QPRT is a tool for high-value estates where the owner is healthy enough to outlive the term, not a general strategy for most homeowners.