Question of the Week: Living Trust Transfers
Thu October 01, 2026
Question:
We have a member who is citing the Garn-St. Germain Act as a reason we cannot prevent her from retitling her home in the name of her living trust. Is this correct?
Answer:
Generally, yes. The Garn-St. Germain Act prevents a lender from exercising a due-on-sale clause when a borrower transfers a home into an inter vivos, or living, trust, provided the borrower remains a beneficiary of the trust and the transfer does not involve a transfer of the right to occupy the property. The living trust is not considered a separate entity from the individual.
This means a credit union generally cannot accelerate the loan solely because the member transfers the home into a qualifying living trust. However, the credit union may request sufficient information to confirm the transfer qualifies for the exemption and require notice of any subsequent change in the beneficial interest or occupancy of the property.
The transfer does not release the credit union’s existing lien on the property or the member from liability under the promissory note. The property remains subject to the credit union’s security interest even though the title is held in the trust.
