There are two common reasons not to include the home in the trust when creating a revocable living trust for the client.
Medicaid planning - if the client is concerned about qualifying for Medicaid in the event of a nursing home admission, the home held by a trustee is non-exempt in Michigan.
Home loans - for mortgages, refinanced mortgages, and home equity loans, the lender will not lend and title insurance will not insure a home held under a trust.
In both instances, the recommendation is typically to transfer the home out of the name of the trustee, finalize the needed transaction, then transfer the home back to the trustee. Unfortunately, as described in this item, clients sometimes forget to do the last transfer. Worse, sometimes they are not aware that the transfer took place. Either way, the client's planning has been disrupted, and this can often lead to undesired results.
For these reasons, it is often recommended that the home not be included in funding a revocable trust.
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