In estate planning, few assumptions are as dangerous as “The house is already in the trust.” Even when a client says it with complete confidence. 

One of the most common and costly issues that surfaces after death is real property that was not actually titled in the trust, despite everyone believing it was. More often than not, it isn’t because the client was careless- it’s because life happened. 

The Refinancing Trap

A classic scenario: the client created their trust years ago and properly transferred the home into it. Then, a few years later, they refinanced.

What many clients don’t realize is that during refinancing, lenders frequently require property to be temporarily removed from the trust and vested back into the individual borrower’s name. The intention may have been to transfer it back afterward, but that final step often gets missed. The lender is not required to transfer title back to the trust following the refinance, and the client often doesn’t realize the implications of the transaction. 

Fast forward to the client’s passing, and the unfortunate truth comes to light: the property that was “definitely in the trust” is not actually titled in the trust. This mistake can trigger a probate or Heggstad petition that could have been avoided with one simple check. 

Pro Tip: When a client executes their estate plan, best practice is to send a follow-up letter providing copies of the executed documents and confirming key details, such as: the location of the original documents; and confirms that the client’s assets - particularly real property - have been successfully transferred into the trust. Typical, right? 

One important detail that is often omitted from this letter is a warning about the refinancing “trap.” Including a brief explanation can help educate clients and prevent issues down the road. 

For example: Please be advised that if you refinance any real property, the lender may require the property to be transferred from the trust into your individual name as part of the refinancing process. If this occurs, you should request that the title company transfer the property back into the trust once the refinance is complete. Should you need assistance verifying title or retitling property into your trust, please feel free to contact our office.

Never Assume. Always Verify: Checking Title Matters

Verifying title is critical- even when the client is adamant. A trust document doesn’t perform to its full effect if the house (typically the main asset) is not titled in the trust. 

Many law firms subscribe to professional title research platforms like DataTree by First American, ParcelQuest, or similar services to search and verify property ownership. These tools are excellent, but they can also be expensive, and not every firm or researcher has access to them.

Here’s a lesser-known but incredibly valuable tip: Make friends with someone who works at a title or escrow company. 

Title companies regularly have access to free title search programs comparable to (sometimes better than) DataTree. Typically, title companies are willing to give access to these programs to legal professionals at no cost when a relationship is established.

Additionally, some counties offer free, online, searchable, public record databases where deeds and vesting information can be accessed directly. While not always as comprehensive or user-friendly as paid platforms, these databases can still provide critical information, occasionally not discoverable through the paid platforms. There have been many times where I have simultaneously used DataTree and  title company searches in an attempt to dig up ancient deeds, only to find them via the county recorder’s website. 

When in Doubt, Order a Title Report

If there is any confusion about the condition of title, or if there’s a cloud on title, I’ve found that the safest course of action is to order a full title report (also known as a guarantee of title). 

Yes, title reports typically cost between $400–$600, but that expense is minimal compared to the time, legal fees, and frustration often involved in correcting title issues without a clear understanding of what needs to be addressed. A title report provides clarity, identifies vesting issues, and identifies liens or encumbrances.

The Bottom Line

In estate planning, assumptions are risky- especially when real property is involved. Even when a client insists their home is in the trust, verification is essential. Refinances, transfers, and lender requirements can quietly undo careful planning.

Checking title, leveraging relationships with title professionals, educating your clients, and ordering a title report when necessary are small steps that can prevent major headaches down the road, and ensure the estate plan actually works when it’s needed most.

Remember: Never assume. Always verify. 

By Travis Floyd, Training and Media Coordinator