When planning an estate, there may be some deed work required. Most people would see fit to get their refinance done before planning their estate to get it out of the way and start their estate planning efforts smoothly. Although there is no issue with getting the refinancing done before estate planning, it is not a prerequisite to the process.
Why You Don’t Need to Refinance Before Planning Your Estate
When a house is refinanced, the title does not change in any way. What gets refiled is the mortgage, or the asset that’s securing the house. The ownership of the house is not changed, which makes refinancing unnecessary when planning an estate.
In the Case of Wills
If an individual creates a will, no action is required for real estate deeds because the will just serves as instructions about what should happen with the assets after their death. The provisions in the will only come into play after the person’s death, which means that whatever is done with the house before that will not matter.
In the Case of Revocable Trusts
On the other hand, in a revocable trust, refinancing is also not required because of the presence of a transfer on death deed. In this special type of deed filed with the County, an individual declares the beneficiary that the real estate property should go to after their death.
The transfer of death deed does not change ownership of the property during the life of the person executing it. So there is no immediate need to refinance before planning a revocable trust.
What You Should Do
The best course of action is for an individual to get started with the process of estate planning, even without the refinance process first. If they have momentum to get their plan done, they should do so. Their estate planning attorneys can accommodate the refinance process after the estate planning process, so there’s no need to prioritize one or the other.