How to Transfer Your Home into a Living Trust in Colorado

So, you have made the smart decision to create a revocable living trust as part of your estate plan, recognizing its power to help your family avoid probate, maintain privacy, and ensure a smooth transfer of your assets. However, merely signing the trust document is not enough. For your trust to effectively bypass probate, it must be “funded” – meaning your assets, specifically your probate assets like your personal property and your real estate (i.e. your home) – must be transferred into the trust. 

For Colorado homeowners, transferring your property into a revocable living trust is a crucial step that ensures your home’s value and legacy are protected. At The Law Office of Kevin R. Hancock, we guide our clients through this essential process with precision and care.

Understanding “Funding” Your Living Trust

“Funding” a revocable living trust refers to the process of legally changing the title ownership of your assets from you to your trust. If assets are not properly transferred into the trust, they may still be subject to probate upon your passing, negating one of the primary benefits of having a revocable living trust. Since your home is often your most valuable asset, making its proper transfer into your living trust is paramount for your estate plan’s success.

Step-by-Step: Transferring Your Colorado Home into Your Living Trust

The process of transferring real estate into a living trust in Colorado primarily involves drafting and recording a new deed. Here’s a breakdown of the key steps:

Step 1: Obtain Your Current Property Deed and Legal Description

Before you can transfer your home, you will need the exact legal description. This can be found on your current property deed, which should be on file with your county clerk and recorder’s office where your property is located.

Step 2: Prepare a New Deed (Quitclaim or Special Warranty Deed)

To transfer your home into your living trust, you’ll need to prepare and sign a new deed. In Colorado, common deeds used for this purpose include a Quitclaim Deed or a Special Warranty Deed.

• Quitclaim Deed: This type of deed transfers whatever interest you currently have in the property, without making any guarantees about the title. It’s often used for transfers between related parties or where no money is exchanging hands, such as when you transfer property from yourself to your trust (where you are essentially transferring it to yourself as trustee).
• Special Warranty Deed: This deed offers a limited warranty, guaranteeing that no title defects arose during the period you owned the property, but not before. Some attorneys prefer this for trust funding to maintain a clearer chain of title.

The new deed will name you as the “Grantor” (the current owner transferring the property) and your revocable living trust as the “Grantee” (the new owner). The Grantee’s name should be the name of your Trust as it appears in your trust document. For example, “The John A. Doe Revocable Living Trust, dated [date of the Trust]”. It is important to include the date the trust was created because it is part of the full name of the trust to distinguish it from any other trust of the same or similar name.

The deed must also include:

• The full legal description of the property.
• The current owner(s) name(s) exactly as they appear on the previous deed.
• The mailing address of the new owner (which will be the trust’s address, often your own).
• A statement of consideration (often $1.00 for trust transfers as no money changes hands).

Step 3: Sign the New Deed Before a Notary Public

Once the new deed is accurately prepared, all current owners listed on the property’s title must sign it in front of a licensed notary public. The notary will then notarize the signatures, verifying their authenticity.

Step 4: Complete a Real Property Transfer Declaration (Form TD-1000)

In Colorado, a deed transferring real estate into an entity, including a revocable living trust, must be accompanied by a Statement of Authority. The purpose of the Statement of Authority is to notify the clerk and recorder (as well as the rest of the world) that the trust exists, where its principal address is, and who are the Trustees with authority to transfer title in and/or out of the revocable living trust.

Step 5: Record the Deed with the County Clerk and Recorder’s Office

After the deed is signed, notarized, and the Statement of Authority is completed, the final crucial step is to record the deed with the clerk and recorder’s office in the county where the property is located. Recording the deed makes the transfer a matter of public record and legally establishes the trust as the new owner of the property. Remember, you will need to send a check for the filing fee to the clerk and recorder along with the deed and statement of authority (currently, $43 per document, which the deed and statement of authority are each considered separate documents).

Important Considerations When Transferring Your Home:

• Mortgages: If your home has a mortgage, transferring it to a living trust generally will NOT trigger the “due-on-sale” clause common in many mortgages, thanks to federal law (the Garn-St. Germain Depository Institutions Act of 1982). This law prevents lenders from calling a loan due when residential property is transferred to a revocable living trust where the borrower remains a beneficiary of the trust.
• Property Taxes: Transferring your home to a living trust typically does not affect your property taxes in Colorado, as the beneficial ownership of the property does not change (you still control and benefit from the property).
• Homeowner’s Insurance: You should notify your homeowner’s insurance company about the change in ownership to ensure your policy remains valid and your home is fully protected under the trust’s ownership. Typically, this just means adding the Trust as a named insured under your home owners insurance policy.

Why Expert Guidance is Essential

While the steps to transfer your home to your revocable living trust might seem straightforward, the legal nuances of property transfer, especially as they relate to estate planning, can be complex. Incorrectly drafted or recorded deeds can lead to significant problems down the road, potentially triggering probate or complicating future transactions. 

The Law Office of Kevin R. Hancock has extensive experience with Colorado real estate transfers and revocable living trusts, providing the expertise necessary to handle your property funding accurately and efficiently. We make sure all legal requirements are met, giving you confidence that your home is protected and your wishes will be honored without unnecessary legal hurdles for your family.

Don’t leave the funding of your living trust to chance. Contact The Law Office of Kevin Hancock today to ensure your Colorado home is properly transferred into your trust, securing your legacy and peace of mind.