When a person creates a revocable living trust, his or her attorney typically prepares quitclaim deeds on each piece of real estate which ,when recorded, transfer the real properties to the person as trustee of his or her trust. The purpose of these transfers is to avoid probate. But many people refinance their real properties in order to obtain a lower interest rate, and when they do, sometimes the escrow removes the property from the trust because certain lenders choose not to lend to a trust, even when it is revocable by its creator.
Some people do not realize that they have signed papers during the refinance which remove the property from their trust. Some people realize that it has been removed but assume that the escrow will transfer the property back into the trust after the refinance has been completed. In most cases, the escrow will not do this.
Most attorneys who prepare revocable trusts also prepare for their clients a pour over Will. This document transfers to the trust any assets that have been left out. Stated differently, if a client with a revocable trust inadvertently removes a property from his or her trust during a refinance, it will go through a court process called probate at the client’s death in order for the property to get back into the trust. The time delays, filing fees, and attorneys fees of a probate can be avoided if the person contacts the attorney after the refinance has been completed so that the property can be deeded back into his or her