[WSBAPT] Due on Sales Clause and transfers to trust

[Kate Gamble]

How about a transfer on death deed to convey the property into the trust for
the husband¹s interest in the Washington property?  I¹m not sure if Idaho
has a similar provision.  See RCW 64.80.

Kate Gamble

Attorney at Law

Uptown Law PLLC



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From:  Lovie Bernardi <lovie at sbfirm.com>
Reply-To:  WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Date:  Monday, February 2, 2015 at 1:53 PM
To:  <wsbapt at lists.wsbarppt.com>
Subject:  [WSBAPT] Due on Sales Clause and transfers to trust

Dear listmates:
 
I have a client whose wife passed away. The couple owned multiple properties
in Idaho and Washington, most with substantial mortgages. The wife had been
living in Washington for medical treatment for many years when she passed
away while the husband lived in Idaho most of the time. We filed a probate
here in King County and an ancillary probate is being handled by an attorney
in Idaho. The will instructed the PR (husband) to place the wife¹s portion
of the community property in a living trust that was established before her
death. She died before any of the property was transferred to the trust,
hence the two probates. Interestingly, the trust did not become irrevocable
upon the death of the wife.
 
The husband wants to transfer both his wife¹s interest and his interest in
the properties to the trust, in order to avoid a double probate at the time
of his own death. (He will probably still be an Idaho resident.) My concern
is whether the transfer will trigger the due on sale clauses in the
mortgages. Most of the mortgages are with Chase. I have reviewed the
exemptions from the due on sale clause under 12 USCS Section 1701j-3(d). The
transfer of the wife¹s interest falls under exemption (d)(3) (³a transfer by
devise, descent, or operation of law on the death of a joint tenant or
tenant by entirely²). But does the husband¹s transfer of his interest fit
under (d)(8) (³a transfer into an inter vivos trust in which the borrower is
and remains a beneficiary and which does not relate to the transfer of
rights of occupancy²)?
 
Am I safe to transfer both the wife¹s interest and the husband¹s interest in
the properties without triggering the due on sale clause? I attended a trust
CLE last August which suggested the transfer of real estate to a trust
during lifetime might trigger the due on sale clause. Does anyone have
experience with this issue and/or suggestions for me? Thank you in advance
for your input.
 
 
Lovie Bernardi
Attorney at Law
Seligmann & Flaherty, PLLC
216 First AVE S, #450
Seattle, WA  98104
(206) 682-2616
 
lovie at sbfirm.com <mailto:joni at sbfirm.com>
http://sbfirm.com <http://sbfirm.com/>
 
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