There are two common reasons to move a home out of your own name and into something else, a living trust or an LLC, and they solve very different problems. One is mostly about estate planning. The other is mostly about liability on investment property. Here is the difference, how the transfer works in Virginia, and the traps to avoid.
Written by Adam L. Engel, Esq., Principal and real estate attorney at Prime Title & Escrow
A living trust and an LLC do different jobs
A revocable living trust is an estate planning tool. You transfer your home to yourself as trustee, keep full control while you are alive, and the property passes to your beneficiaries without probate when you die. An LLC is a liability tool. Owners use it to hold rental or investment property so that a claim tied to the property is aimed at the entity, not at them personally. The two are not interchangeable.
Moving your home into a living trust
For a primary residence, a revocable living trust is the usual choice. You record a deed transferring the home from yourself to yourself as trustee of your trust. You can still live there, sell, or refinance, and because the trust is revocable you can undo it. Federal law, the Garn-St. Germain Act, protects a transfer into your own living trust from triggering the loan’s due-on-sale clause, and for tax purposes a revocable grantor trust generally keeps the benefits you already have, though those details are worth confirming for your situation.
Putting investment property into an LLC
For a rental or other investment property, an LLC can make sense to limit personal liability. You record a deed from yourself to the LLC. Two cautions come with it. A transfer to an LLC is not protected by Garn-St. Germain the way a living trust is, so it can trigger a due-on-sale clause, and you should clear it with your lender first. And moving a property into an LLC can affect your financing, insurance, and taxes, so it is worth coordinating with your attorney and accountant before you do it.
An LLC is built for investment property, not the house you live in. Moving your primary residence into an LLC can cost you the capital gains exclusion when you sell, complicate your mortgage and homeowner’s insurance, and risk the due-on-sale clause, usually without the liability benefit you were after. For your own home, a living trust is almost always the better tool.
The mortgage, the taxes, and your title policy
Whichever entity you use, three things deserve attention. The mortgage, because of the due-on-sale point above. The recordation and grantor’s taxes, since some transfers into an entity you fully own are exempt under Va. Code 58.1-811 while others are not, depending on the structure. And your title insurance, because your existing owner’s policy may not automatically extend to the new owner, the trust or LLC, so an endorsement may be needed to keep your coverage in place. I explain the policy basics in owner’s versus lender’s title insurance, and I check each of these before recording.
How the transfer actually happens
In both cases the mechanics are the same, a properly drafted deed from you to the trust or the LLC, with the exact legal description and the entity named correctly, recorded with the Circuit Court Clerk. Getting the entity name and the signing exactly right matters, because an error can cloud the title or, worse, fail to put the property where you intended it to go.
How I handle it
I prepare and record the deed into your trust or LLC, confirm the tax treatment, flag the mortgage and title insurance points, and coordinate with your estate planning attorney or accountant so the deed fits the plan they built. For a living trust I work alongside your estate documents. For an LLC I make sure the entity is properly in place to take title. The aim is a transfer that does what you wanted without quietly costing you a tax benefit or tripping your loan.
Tell me the property and the goal, estate planning or liability, and I will prepare and record the right deed in Virginia, and flag the mortgage, tax, and title insurance points before you sign.
Get Your Free Quoteor call (703) 552-4155Frequently asked questions
Should I put my house in a trust or an LLC?
For your primary home, a revocable living trust is usually the right tool, since it avoids probate while keeping your tax benefits and protecting your mortgage from the due-on-sale clause. An LLC is built for rental or investment property to limit liability, and is generally a poor fit for the home you live in.
How do I transfer my home into a living trust in Virginia?
You record a deed transferring the property from yourself to yourself as trustee of your trust. You keep control and can sell, refinance, or revoke it. The deed has to name the trust correctly and carry the exact legal description to be effective.
Will moving my home into a trust trigger my mortgage?
Generally no for a revocable living trust. Federal law, the Garn-St. Germain Act, protects a transfer into your own living trust from the due-on-sale clause. A transfer into an LLC is not protected the same way, so you should clear that with your lender first.
Do I owe tax to transfer my home into a trust or LLC?
It depends on the structure. Some transfers into an entity you fully own are exempt from Virginia’s recordation and grantor’s taxes under Va. Code 58.1-811, and others are not. It should be confirmed before the deed is recorded.
Does my title insurance still cover the property after I transfer it?
Not always automatically. Your existing owner’s policy may not extend to the new owner, the trust or LLC, so an endorsement may be needed to keep your coverage in place after the transfer.
Can I still sell or refinance after putting my home in a trust?
Yes. With a revocable living trust you keep full control and can sell, refinance, or move the property back out. The lender and title company will want to see the trust documents, which is routine.
This article is general information about transferring a home into a trust or LLC in Virginia. It is not legal, tax, or estate planning advice for your specific situation, and the right structure depends on your facts. Please confirm the details with me and coordinate with your estate planning attorney or accountant before recording a deed.