What happens to my home if I transfer it into a family trust during my lifetime? – North Carolina

Short Answer

In North Carolina, transferring a home into a family trust during life usually means the home’s legal title is moved into the name of the trust’s trustee, to be managed under the trust terms. If the trust is revocable and the parent is the trustee, day-to-day control often stays practically the same, but the home is now owned in a different legal “bucket.” The transfer is typically done by signing and recording a new deed with the county Register of Deeds, and the home remains subject to existing mortgages, liens, and creditor issues.

Understanding the Problem

In North Carolina estate planning, a common question is what changes when a parent transfers a home into a family trust while still living. Can the parent still live in the home, refinance or sell it, and decide who receives it later? Does the transfer change who “owns” the home, who can sign paperwork, and what happens if the parent later becomes unable to manage finances? The key decision point is whether the trust is designed so the parent keeps control during life (often a revocable trust) or whether control shifts to someone else during life.

Apply the Law

Under North Carolina law, when real property is transferred “to a trust,” the law generally treats that as a transfer to the trustee(s) of that trust, because a trust works through its trustee holding and managing title. After the deed is recorded, the trustee becomes the record owner for real estate purposes and must follow the trust document’s instructions about use, management, and later distribution. Even after a transfer to a trust, existing deeds of trust (mortgages) and other recorded liens generally still attach to the property.

Key Requirements

A valid trust structure: The trust must name a trustee and set out who benefits from the home and under what conditions (for example, the parent during life, then children after death).
A properly prepared deed: The home is typically transferred by a new deed from the current owner to the trustee of the trust (often described as “Trustee of the [Name] Trust dated [date]”).
Recording in the correct county: The deed must be recorded in the office of the Register of Deeds in the county where the home is located so the public land records reflect the new ownership.

What the Statutes Say

N.C. Gen. Stat. § 39-6.7 (Conveyances to or by trusts) – Treats a transfer “to a trust” as a transfer to the trustee(s), and a transfer “by a trust” as a transfer by the trustee(s), helping clarify how deeds involving trusts are construed.
N.C. Gen. Stat. § 105-317.2 (Deed transfer reporting information) – Requires certain information to be included in deeds (including whether the property includes a grantor’s primary residence) to support accurate tax appraisal; noncompliance generally does not invalidate an otherwise duly recorded deed.

Analysis

Apply the Rule to the Facts: Here, a parent wants to create a family trust and transfer a North Carolina home into it as part of an estate plan. If the trust is set up so the parent serves as initial trustee and keeps the power to change or revoke the trust, the parent often continues to live in the home and make decisions, but the recorded owner becomes the trustee rather than the parent individually. If the trust names a successor trustee, that successor can step in under the trust terms if the parent can no longer manage affairs, which can reduce the need for a court-supervised process just to handle the house.

Process & Timing

Who files: The current owner signs a deed transferring the home to the trustee. Where: The deed is recorded with the Register of Deeds in the North Carolina county where the property is located. What: A new deed (often a warranty deed or quitclaim deed, depending on the plan) that names the trustee as grantee; the deed typically includes the required transfer-reporting information. When: Usually after the trust is signed and before the parent’s death, because an unfunded trust (no deed recorded) may not control the home.
Update the “paper trail”: After recording, it is common to confirm the tax mailing address, homeowner’s insurance naming/interest language, and any lender requirements so there are no surprises later when making a claim, refinancing, or selling.
Ongoing management: The trustee manages the home under the trust terms (paying taxes/insurance, authorizing repairs, signing contracts). If the home is later sold, the trustee signs the sale documents and the proceeds are handled as trust property.

Exceptions & Pitfalls

Mortgage and lender issues: A transfer to a trust does not automatically remove or change a mortgage. Some loans have “due-on-sale” language; many owner-occupied transfers to certain living trusts are commonly handled without acceleration, but lender rules and paperwork vary. It is safer to review the loan documents and coordinate before recording a deed.
Insurance and liability gaps: If the deed changes ownership to a trustee, the homeowner’s insurance should be reviewed so the correct insured and interests are shown. Otherwise, a claim can become harder than expected.
Creditor and benefit planning misunderstandings: A revocable trust is often used to streamline administration and control distributions, not to “hide” assets. Creditor rights and public-benefit eligibility can be complicated and fact-specific, and transferring a home can create unintended consequences if the plan is not coordinated.
Bad deed drafting or recording mistakes: Using the wrong grantee name, failing to reference the trustee correctly, or recording in the wrong county can create title problems that surface later during a sale or refinance.

Conclusion

In North Carolina, transferring a home into a family trust during life typically moves legal title into the name of the trust’s trustee, who must manage the property under the trust terms. In many plans, the parent keeps practical control during life (especially with a revocable trust), while the trust sets a clear path for management and distribution later. The key next step is to prepare and record a deed with the county Register of Deeds so the trust actually owns the home as intended.

Talk to a Estate Planning Attorney

If a parent is dealing with transferring a North Carolina home into a family trust during life, our firm has experienced attorneys who can help explain the options, prepare the trust, and make sure the deed and follow-up details are handled correctly. Call us today at [CONTACT NUMBER].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.