Transferring Home Out From Trust

As a general rule when one refinances their Michigan home or cottage after having placed it in their revocable living trust the lender requires a transfer back into the name of the individual homeowner(s).  The rationale for this is that the refinance loan is approved based upon the borrower’s income.  Most revocable living trusts do not have sufficient income to qualify for such a loan.

In these tough economic times the local assessor may then raise the question as to whether a deed from the trust back to the original property owner(s) results in uncapping the real property taxes.  Under Michigan law a conveyance from a trust does not uncap the taxes if the grantee on the deed “is the sole present beneficiary or the spouse of the sole present beneficiary (of the trust), or both.”

The specific legal citation is Michigan Compiled Law 211.27a(6)(d). This exception is not listed on the Property Transfer Affidavit (PTA).  So, if you run into this situation, check the “Other” box near the bottom of the PTA; type in the statutory citation {i.e. MCL 211.27a(6)(d)}; and state that it is a transfer from the trust to the sole present beneficiary or the spouse of the sole present beneficiary of the trust, or both, as the case may be.  Let me know if you have any questions!

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