Trust Transfer Deed – How to Put Real Estate into a Trust
Attorney Paul Denni
- January 21, 2021
What is a Trust Transfer Deed?
A trust transfer deed is a special type of deed . A deed is a legal instrument that transfers title of real estate, often from one person to another.
The trust transfer deed is a special type of deed that transfers title of real estate from an individual person into a trust.
Who Owns the Property in a Trust?
To understand property ownership as it relates to the trust, you need to know the difference between the various parties to a trust. When you create a trust, you have the grantor , the trustee , and the beneficiary .
The person creating a trust can be referred to as either the grantor, settlor, trustor, or trustmaker.
The grantor owns the assets that are transferred into the trust. Transferring an asset “into a trust” means re-titling the property in the name of the trustee.
Trustee and Beneficiaries
The trustee is a person who holds title to the trust property, on behalf of the grantor, for the benefit of the beneficiary or beneficiaries. The trustee and the grantor can be the same person, which is often the case in a revocable trust.
So even though the grantor owns the property in a trust, once that property is held in trust for one or more beneficiaries, the property interest becomes bifurcated. This means that even the the trustee holds legal title to the trust assets on behalf of the grantor, the beneficiaries of those assets have an equitable interest in the property, which is a legally enforceable right.
So if the trustee takes action that diminishes the value of the trust property, or takes other action inconsistent with the trust instructions, the beneficiaries still have a legal claim against the trustee even though they do not technically “own” the property yet.
How to Transfer Property into a Trust
In California, in order to transfer property into a trust you must change title of the asset from the grantor’s name to the trustee’s name.
Trust Transfer Deed
The type of deed required for this transfer is the trust transfer deed, which must be recorded with the county recorder’s office.
For example: If John and Mary, a married couple, buy a home and take an equal interest in the property, they might take title as “John Smith and Mary Smith, husband and wife, as joint tenants.”
If John and Mary later create a revocable trust as part of their estate planning and want their residence to be transferred into the trust, they would transfer the property into the trust via the trust transfer deed and change title to their residence as “John Smith and Mary Smith, trustees of the Smith Family Trust.”
Preliminary Change of Ownership Report (PCOR)
In California, when you transfer ownership of real estate, you are also required to file the Preliminary Change of Ownership Report (PCOR) with the county recorder’s office where the property is located.
The purpose of the PCOR is to notify the county assessor’s office of the transfer so they can determine whether to reassess your property taxes, which in California are 1% of the property value.
Fortunately, when you transfer the property into your trust, your property is not subject to tax reassessment. Thus, assuming the value of your property has increased, you will be exempt from paying higher property taxes after transferring your property into the trust.
Who Pays Capital Gains Tax in a Trust?
Capital gains tax must be paid when you have made profit on the sale of an asset. When you transfer property into your trust via the trust transfer deed, this is a transfer of the asset and not a sale – therefore no capital gains tax will be assessed.
After real estate becomes part of the trust and is later sold, the person responsible for paying capital gains tax depends on what type of trust it is.
Keep in mind that the IRS exempts the first $250,000 (if single) and $500,000 (if married) from capital gains, whereas California taxes capital gains as ordinary income.
Generally speaking, in a revocable trust, the grantor is responsible for paying the capital gains tax. In an irrevocable trust , the capital gains is normally treated as income and taxed to the trust itself.
Note: Tax law can be complex and nuanced, and answers may vary depending on your specific situation. It is best to consult with an attorney or accountant to best determine your tax liability.
Get Help Transferring Your Property into a Trust
Why should i transfer my real estate into a trust, stay out of probate court with a revocable trust.
Transferring your property into a trust can have many benefits, which are different depending on what type of trust you create.
A revocable trust is normally created in lieu of a will. With a revocable trust, you can freely transfer property into and out of the trust. After you pass away, the trust becomes irrevocable and all trust assets will be distributed to trust beneficiaries according to the trust instructions.
So your revocable trust acts as a will once you pass away, with one main difference: you won’t have to deal with probate court when your trustee administers your trust and transfers your property to your beneficiaries.
When you have a will, after you pass away it must be “probated,” which means the probate court has to authorize the person administering your will, and sometimes even individual transactions. Probate court is also quite expensive and time-consuming.
When you create a revocable trust instead, the trustee can follow your trust instructions without court involvement. If you need help creating your revocable trust, contact us below for help.
Asset Protection with an Irrevocable Trust
An irrevocable trust has less flexibility – once you transfer property into it, it generally cannot be transferred back out. Despite being less flexible than a revocable trust, an irrevocable trust may afford greater protection from creditors and may reduce your tax liability.
You should always consult an attorney to discuss the best options given your circumstances .
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Properly transferring your real property into a living trust ensures your desires upon death are upheld. Many people fail to file the proper deeds after establishing the trust. When this happens, the property is still subject to probate court and costs. Ultimately, the property may not go to the desired beneficiary.
California Revocable Living Trust
A California revocable living trust gives a person control of the trust assets while alive but establishes the parameters of transfer to beneficiaries after death. A trust is a unilateral contract between the grantor who owns the assets and the beneficiary receiving the assets. It is managed by a trustee. Revocable means it can be withdrawn at any time by the trustee during the grantor's life. As such, the grantor and trustee are often the same person in a revocable living trust. Trusts allow assets to pass to beneficiaries avoiding the entire probate process as long as the trust is properly created, funded and executed.
Properly Created Trust
A properly created trust defines all parties including the grantor, the trustee and beneficiaries. It usually includes a last will and testament, but more importantly, it should contain a schedule of assets. The real estate property must be properly listed on the schedule of assets including the address, assessor's parcel number and legal description of the property. The name on the title should match exactly the name of the grantor. Discrepancies open the door for someone to contest the trust. Trusts are often created by attorneys, but this isn't required. As long as the elements are described and the document is dated and notarized with original signatures, it is a legal trust.
Funding the Trust
Many grantors make the mistake of never funding the trust. They think that the schedule of assets is the only thing necessary for the successor trustee to execute their wishes. This is wrong. All accounts must be renamed with the owner becoming the trust. In California, real property is assigned to a trust using a grant deed. A grant deed is a notarized form that states the owners of the property give the property to the trust. The owner is the grantor on the deed and the trust is named as the grantee. Make sure the names all match legally to the trust and deed. The grant deed is filed with the county recorder to officially fund and execute the trust. Contact homeowners insurance policies to name the trust as the policy holder, protecting the asset against loss.
Executing the Trust
If the grantor is the trustee while alive, a successor trustee is named in the trust to oversee the distribution of trust assets after the grantor's death. The trust might outline how those assets are to be liquidated and distributed. For example, a minor child who is named as a beneficiary may have a designated guardian. The house might be retained according to the trust for the child to occupy while growing up and not be liquidated until the child is of legal age.
- HowToProbate.com: How to Transfer Real Property Into a Living Trust Via Grant Deed
- Amity Law Group: Did You Correctly Add Your Home to Your Living Trust
- FindLaw: Revocable Living Trusts in California
Kimberlee Leonard lived in the Bay Area while going to school at the University of San Francisco. Before becoming a full-time writer, she worked for major financial institutions such as Wells Fargo and State Farm. She has developed content for brands such as Trupanion, Live Your Aloha, Neil Patel and Home To Go. She currently lives in her home state of Hawaii with her active son and lazy dog.
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How to Transfer Property Out of a Trust After Death
After a grantor passes away, becoming the trustee can be daunting, especially if you’re responsible for distributing property. Houses are among the most valuable assets in a family for financial and sentimental reasons. Therefore, it’s critical to understand how to transfer property out of a trust to the designated beneficiary. When the trust owner dies, the trustee can transfer property out of the trust by using a quitclaim or grant deed transferring ownership of the property to the beneficiary. Here are details on the process and what to do with the inherited property if you’re the beneficiary.
Estate planning is a complex process. Find a financial advisor who can help you today .
Transferring property out of a trust is the trustee’s job. Generally, after the trustor passes away, the trustee notifies the trust’s beneficiaries, enacts the trust’s conditions and the beneficiaries receive the assets.
In addition, the grantor’s death makes the trust irrevocable . As a result, the trust’s provisions become permanent, and beneficiaries must abide by them to receive any assets. So, the beneficiaries must fulfill specific requirements, such as reaching adulthood, to inherit property from the trust. Likewise, the trustee has a role to play, described as follows.
Transfer the Deed to the Beneficiary
The deed to a property confers ownership, so transferring the deed to the beneficiary is the vital first step. Specifically, you’ll need a quitclaim or grant deed for the transfer. The rules for filling out such documentation vary by state, so it’s recommended to work with an attorney to ensure the deed is free of errors.
Provide Deed Information
As the trustee, you are responsible for the transfer deed containing the correct information. First, the deed should state that the beneficiary isn’t purchasing the property. In addition, because the transfer is not a property sale, the beneficiary will not pay transfer tax .
Then, the deed should declare what type of ownership the beneficiary will take. The beneficiary’s marital status and financial circumstances will determine how they will own the property.
Remember, some states require other documents to transfer the property. In addition, they might impose limitations on property ownership for beneficiaries. As a result, check your state’s regulations to understand what deed information the transfer needs to be valid.
An outstanding mortgage on the property usually means the beneficiary receives the financial burden along with the property. For example, if $50,000 is left on the mortgage of home, the beneficiary becomes responsible for repaying the loan. Therefore, it’s crucial for the beneficiary to communicate with the mortgage lender and find out if they require refinancing when the original owner passes away.
However, outstanding mortgages might not become the beneficiary’s problem in some cases. Specifically, the trustor might have set the conditions of the trust to pay the rest of the mortgage upon the trustor’s death. Therefore, it’s essential for the trustee to examine the trust documents to see what happens to the mortgage after the trustor passes away.
File the Deed
Once you obtain the necessary signatures and notarization for the deed , you’ll file it with the city or county government entity overseeing real estate transfers. For instance, depending on the state, you might file with the register of deeds, deeds office or county clerk. Filing generally costs a nominal fee.
What to Do When You Inherit Property from a Trust
When you receive property from a trust , you have three primary options: occupy the home, sell it or rent it out. Each choice has its pros and cons. For example, if you receive a home without a mortgage, it could be financially advantageous to sell your current home and move into the one from the trust. However, the home might need repairs or not be the right size for the number of occupants.
If moving in isn’t feasible or desirable, selling the property can bring in considerable cash. Plus, you’ll rid yourself of the responsibility of paying property taxes and keeping the home in good condition. However, an existing mortgage and necessary repairs can diminish the profits from selling.
Thirdly, renting the home to tenants can bring in monthly income and confer tax breaks specific to landlords , such as repair and utility cost deductions. That said, managing rental properties can be expensive and time-consuming, so collecting rent might be a headache instead of easy passive income.
Tax Implications of Inherited Property from a Trust
Inheriting property typically doesn’t incur specific tax breaks or expenses at the time. Instead, what you do with the property has tax implications down the road. The absence of a federal inheritance tax makes inheriting property free in most cases.
However, six states charge inheritance tax to siblings, aunts, uncles and in-laws. Pennsylvania and Nebraska impose inheritance tax on children and grandchildren. As a result, the less related you are to the trustor, the more likely you are to pay state inheritance tax.
Likewise, selling the home might not have significant tax consequences because of the IRS’s step-up rule . When you receive a property, you “step up” its value to the current market. For example, say your grandparent bought a house for $50,000 and passed it down to you after they died. The house appraises for $300,000 when you receive it, but since this value is stepped up, you won’t pay capital gains taxes for the $250,000 increase. You can also delay the step-up assessment by six months if you think the value will increase steeply in that period.
Remember Capital Gains
However, you will pay capital gains taxes if you sell the home at a price higher than its step-up value. Using the above example, if you sold the home for $350,000, you would be liable for capital gains taxes for the additional $50,000. Fortunately, the IRS will exclude up to $500,000 of capital gains taxes for couples and $250,000 for individuals in situations like this if the home was your primary residence for at least two out of five years.
Remember, renting out the home can confer tax advantages as well. For instance, you can deduct costs to improve the home and get a tax break for property value depreciation. Similarly, if you decide to live in the home and not sell it, you can enjoy the tax benefits of homeownership , such as deductions for property taxes or working in a home office.
Transferring property out of a trust after the trustor’s death is a multistep process in which the trustee fills out deed documentation, identifies mortgages and transfers ownership to the beneficiary. Beneficiaries receiving property generally don’t experience tax disadvantages but may take on the mortgage along with the home. As a result, inheriting property means deciding between living in the home, renting it out or selling it. Again, these choices usually have positive or neutral tax implications thanks to the IRS step-up rule. However, because each financial situation is unique, it’s crucial to understand the tax consequences of handling inherited property.
Tips on Transferring Property Out of a Trust
- Inheriting a home can be a financial benefit – but handling new property unwisely can cost you. Consider consulting a financial advisor to help you understand the implications of selling, renting or occupying the home. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now .
- Inherited property can be valuable. If you don’t need a second home, selling the home can help you achieve your financial goals. To make the most of the opportunity, use this guide to selling inherited property .
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Should I put my house in a trust?
A trust can give you better control than a will over how your assets are transferred, and a trust may offer other advantages, like helping you qualify for Medicaid
Updated December 6, 2021 | 8 min read
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Table of contents
7 reasons to put your house in a trust
Reasons not to put your house in a trust, how to put a house in a trust, do you need a trust if you have a will, should you put your house in a revocable trust or irrevocable trust.
Many people use their last will and testament to pass on money and belongings after they die, but some people could benefit from using a trust to pass on their house or other valuable assets.
A trust is a legal arrangement in which you can place your money, possessions, and other assets so they can later be used by you or your future heirs. A trust isn’t just for rich people. Trusts can offer greater control than a will over who will get your money and possessions after you die. Unlike a will, trusts can also include instructions for how or when your beneficiaries will receive the assets. If you want to pass on certain assets before you die, a trust may also help.
One of the main reasons people put their house in a trust is because assets in a trust do not go through probate after you die, while everything you bequeath through your will does go through probate. Probate is a public process and allows anyone to see what was in your estate when you died, how much your estate was worth, and the people who received your things. Using a trust to pass on your house can also transfer ownership faster than a will would have.
You can generally still sell your house after putting it into a trust, depending on the exact language of your trust’s founding document. You can also move your house into a trust if you’re still paying off a mortgage; moving a house into a trust won’t trigger a “due on sale” clause. Placing your house into certain types of trusts can also help you qualify for Medicaid by decreasing your taxable estate.
A trust can give you more control than a will over who gets your assets after you die and how they get the assets.
Assets in a trust do not go through probate, unlike everything passed on via your will.
Trusts can also help you pass on your assets before you die.
Putting your home in certain types of trusts also decrease your taxable estate, potentially qualifying you for your Medicaid.
Your personal circumstances will dictate whether or not it’s a good idea for you to put your house in a trust. To help you make your decision, here are seven common reasons to put your house into a trust:
Your house (and everything else in the trust) will avoid probate after you die .
Ownership of the house can transfer to your heirs faster from a trust than through probate.
Wealthy estates may avoid or minimize estate taxes with an irrevocable trust.
Trusts allow you to add conditions for how or when heirs receive an inheritance .
A trust, unlike a will, can help you pass on assets even before you die .
Placing a house in an irrevocable trust can help you qualify for Medicaid by decreasing your taxable estate.
With an irrevocable trust you can get asset protection from creditors , including nursing homes.
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Trusts avoid probate
The ability to avoid probate is a major reason that many people put their house or other assets into a trust. Probate is a process where a court, after you die, proves the authenticity of your will and your possessions are passed on to your heirs.
The contents of wills and estates go into the public record after the probate process is completed, so anyone could see what you owned, how much it was worth, and who received it after you died. Transferring assets via a trust is a private process.
Probate can also drag out in certain cases, potentially costing a significant amount of money and lasting for months or even years. Trust assets are only passed on according to the instructions in the trust document, so you can help your heirs avoid a long and costly probate.
→ Find out how long probate takes
Situations where probate may drag out include if your estate is large; if you left unclear instructions for bequeathing your assets; or if you have assets in multiple states. (Each state has its own probate laws so moving a house from another state into a trust could especially simplify things for your heirs.) Issues can also arise if someone contests your will to change how your assets are distributed. For instance, someone may contest a will to get full or partial ownership of valuable assets like a house, investments, or a patent you owned.
Trusts help you pass on your house before you die
Trusts make it possible for the grantor (the trust’s creator) to place conditions on when and how beneficiaries will receive the trust assets. That means you could move your house into a trust and then transfer ownership to someone else even before you die (like by setting it up as a trust fund ). For example, you may choose to pass on your house should you go into long-term care or become incapacitated. A will can only transfer assets after the grantor has passed away.
→ Read more about how trust assets are distributed to beneficiaries
Tax benefits of transferring a house through a trust
Moving your house or other assets into a trust (specifically an irrevocable trust) can decrease your taxable estate. For a wealthy estate that could otherwise be subject to a state or federal estate tax , putting assets into a trust can help avoid or minimize the estate taxes. Estate taxes generally apply only for estates worth millions of dollars.
There are two main reasons you may not want to move your house (or other assets) into a trust:
You don’t want to pay the cost of setting up and maintaining a trust .
You still have to wait for other assets to go through probate.
The cost of setting up a trust varies based on where you live and the exact details of your trust, but drafting the legal paperwork for a simple trust will likely cost $300 or more if you work with an estate planning attorney. Creating a larger or more complicated trust — like one that contains your entire estate or has more restrictions on when your beneficiaries can receive their trust assets — could potentially cost you $1,000 or more.
After creating your trust, you must also pay to maintain it. Maintenance won’t be a significant cost for everyone, but it might be if you hired someone to serve as your trustee (the person or corporation who maintains your trust and the assets within it).
→ Find out how much trustee fees are
The cost of a trust also may not be worth it for you if you still plan for other assets to go through probate, especially valuable possessions that could slow down probate or result in a contested will. However, if your house is the only big investment you own, using a trust just for that house could be worth it.
Keep in mind that if you use a testamentary trust — a trust that’s created via your will — your assets will still go through probate before going into the trust.
Another way to give someone your house is with a transfer-on-death deed . This estate planning measure is less costly and can still help you avoid probate.
After you've set up a trust — by creating a trust document that outlines your beneficiaries and the terms upon which they receive the property — here's how you can put your house and other real estate property in it.
Prepare a new property deed. You can copy the old one and update the necessary information, like making the trust the new owner. The format is usually [ Trustee's name ], trustee of the [ trust name ] like this: "Jane Smith, trustee of Smith family trust."
Get it notarized. You and any other owners of the house need to sign the deed in front of a notary public (for a small fee ) to authenticate the deed.
File the deed with the proper office. The final step of putting your home in a trust is recording the property transfer with the county clerk's office, which holds local property records in your area.
If you want to transfer property out of the trust you can take the same general steps.
If you have a small estate or if you’re leaving everything equally to a spouse and children, then a will may be all you need. However, a well-made trust can give you more control over when and how your house is transferred to someone else. For example, you could set up your trust such that your house passes to your chosen beneficiaries before you even die.
As mentioned above, using a will can also leave issues in probate if someone doesn’t like their inheritance and challenges your will. A house is the most valuable asset in many people’s estates, so tensions between your heirs may rise if you leave a house entirely to one person — like if you give it to one child and your other children get nothing. Using a trust to bequeath your house increases the likelihood that your house will go to the intended beneficiary, without your family having to go through an expensive or protracted legal battle.
→ Learn more about the difference between a will and trust
If you do choose to put your house in a trust, ensure that the instructions in your will and trust are in agreement. (For example, if you put your house in trust, then you should not put it in your will .) Having competing information could cause confusion among your family members, even if it ultimately doesn’t affect probate.
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A revocable trust , also called a living trust , is one that you create while you’re alive and that you can revoke (close or modify) at any time. An irrevocable trust is one that you cannot close, either because you structured it such that you cannot revoke it or because you have already died.
→ Learn about dissolving a trust
Many people use a revocable living trust because it gives them more control over the trust assets. Putting your house in a revocable trust still allows you to change the terms of the trust or remove the house from the trust if you want to. Taxes and personal finances are generally easier to manage with a revocable trust. A revocable trust becomes irrevocable after you die since you can no longer close it.
Irrevocable trusts do offer some distinct advantages, though. You may want to put your house in an irrevocable trust if you need to lower your taxable estate for Medicaid eligibility or other income-restricted programs. Assets in an irrevocable trust usually cannot be claimed by a creditor , offering you asset protection in the event you need to repay someone. Assets in an irrevocable trust are also safe from the Medicaid estate recovery program .
→ Learn more about how living trust can protect assets from a nursing home
If you’re considering an irrevocable trust, know that it will have to pay its own tax returns (the trust manager, trustee , would file the returns). You may also want to have someone other than yourself manage it, for legal reasons.
Talk with an estate lawyer to learn more about what type of trust of best for your situation.
Senior Editor & Personal Finance Expert
Derek is a former senior editor and personal finance expert at Policygenius, where he specialized in financial data, taxes, estate planning, and investing. Previously, he was a staff writer at SmartAsset.
Questions about this page? Email us at [email protected] .
If you transfer property to a family member, what are the tax implications?
Editor’s Note: Transferring property to a family member could have tax consequences. It depends on the scenarios. Read on as we dive into a few common scenarios if you give property to a family member.
Real estate transfers are common among family members. Whether it’s to pass down your legacy to loved ones or a part of an estate planning strategy, these transactions happen for many reasons. While property transfers can be useful to accomplish a particular goal, not all taxpayers consider the tax consequences.
There are other non-tax related issues to consider before attempting the property transfer by deed, will, or trust. Thus, here are common property transfer scenarios between family members and the respective tax implications:
Family property transfer: Adding a joint owner
You add another family member to the deed as a joint owner of your home so that it will pass to them automatically upon your death.
Adding a family member to the deed as a joint owner for no consideration is considered a gift of 50% of the property’s fair market value for tax purposes. If the value of the gift exceeds the annual exclusion limit ($16,000 for 2022) the donor will need to file a gift tax return (via Form 709 ) to report the transfer. However, they will not likely owe gift tax due to the unified gift and estate tax exemption, which is $12,060,000 for 2022. Additionally, each owner will have to adjust their basis in their respective ownerships interests on the date of the transfer.
When one of the owner(s) of the property die, the decedent’s personal representative must include the fair market value of the decedent’s ownership interest in the gross estate for estate tax purposes. The surviving owner receives the decedent’s ownership interest with a stepped-up basis equal to the inherited property’s fair market value (generally the same amount included in the decedent’s gross estate). The surviving owner combines the stepped-up basis in the inherited portion with the basis received at the time of the gift to determine their total adjusted basis in the entire property. (Basis is used to determine gain or loss when the home is later sold.)
Adding a family member to the deed while retaining a right to use the home exclusively for the rest of your life has different tax consequences. This situation results in the creation of a life estate, which is discussed next.
Family property transfer: Gifting real estate
You give a real estate property to a child or grandchild.
If you give a plot of land to your child or grandchild, it’s considered a gift in the eyes of the IRS. Real estate gifts to a child or grandchild aren’t tax deductible. You can’t claim a loss, even if the paperwork shows you sold the property for $1 or another nominal amount. So, the tax issues relate to the nature of expenditures, not savings.
For example, if you gift land worth $500,000 and you do not receive anything of that value in return, there are tax implications for the donor. The IRS allows you to give $16,000 (for 2022) annually to anyone you like, tax-free. If you’re married, you and your spouse can each give $16,000 (for 2022). However, if the value of the gift exceeds the annual exclusion amount, you, as the donor, must file a gift tax return (Form 709) to report the gift. As discussed earlier, you will not likely owe any gift tax if you have not yet used up your unified gift and estate tax exemption.
While you may think you can fly under the radar with real estate transactions, this is not the case. Do your research on property transfers so you can plan ahead from a tax perspective.
Get started with filing taxes online or with an H&R Block tax pro , we’re here for you.
Disclaimer: If you are considering transferring property to family, talk to an attorney licensed in your state with expertise in real property transfers.
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Putting A House Into A Trust
The pros and cons explained, putting a house into a trust - is it a good idea.
Over the past decade at Rochester Law Center , we’ve helped 1,000s of clients estate plan. Some of the most common questions we get asked are about living trusts. In this article, we’re going to cover some of the pros and cons of putting a house into a trust . Additionally, we’re going to answer some common questions asked frequently about putting a house into trusts, who owns your home after putting a house into a trust, and what you can and can’t do with your property after it’s in your trust.
Putting A House Into A Trust Or Last Will And Testament?
Estate planning is about creating a custom plan to allow you to transfer your money, property, and assets to your family in the most efficient way possible. The two most common estate planning documents are the last will and testament and the revocable living trust .
Both of these documents let you specify which of your loved ones should receive your assets after you pass. However, with a last will and testament, your assets must go through probate court before your family can receive them. This can take months, sometimes even years if your will is contested in court.
On the other hand, a living trust avoids probate court. This means that your family can receive your money, property and assets in a matter of days or weeks after you pass instead of months or potentially years.
Putting A House Into A Trust - Why Do People Do It?
There are two main reasons why people put a house into a trust. The first reason is that they want their family to be able to inherit their home without having to go through the long, stressful, and expensive probate court process. Instead, their home can be transferred to their heirs in a private setting shortly after their death.
The second reason deals with planning for incapacity. It’s a common misconception that estate planning only plans for death, but comprehensive estate planning plans for incapacity as well. When you create a living trust, you will name a successor trustee. This person is responsible for distributing your assets to your heirs after you die. They are also responsible for stepping in and managing the assets in your trust if you become incapacitated and can no longer communicate. By putting a house into a trust, you can ensure that one of your most important assets will be managed and taken care of by someone you trust in the event you become incapacitated.
Putting A House Into A Trust - How Does It Work?
In order to avoid probate court, your assets need to be placed into a living trust. This called funding the trust. When you create a living trust, you are known as the settlor or grantor, depending on what state you live in. When you set up the living trust, you also assign yourself as the trustee. The trustee is the person who has the right to manage all of the money, property, and assets that are placed inside of the living trust. By naming yourself trustee while you are living, you maintain the ability to manage all of the assets in your trust just like you do now. For example, if you plan on putting your house into a trust, you can still sell it at any time in the future.
Additionally, you will name your beneficiaries in your revocable living trust. Your beneficiaries are your loved ones that you want to inherit your money and property after you die. Usually this is a spouse, children, grandchildren etc.
Lastly, you will designate your successor trustee. Your successor trustee is the person who will take over management of your living trust after you die or become incapacitated. They will be responsible for settling your estate and distributing your assets to your beneficiaries after you die. Additionally, if you are putting your house into a trust, the successor trustee is the person who will manage your home, and any other assets you placed in the name of your trust if you become incapacitated.
In the next section we will talk about all of the additional benefits of putting a house into a trust.
Putting A House Into A Trust - What Are The Benefits?
As mentioned earlier, one of the biggest advantages of putting a house into a trust is that, unlike a will, a living trust allows you to avoid probate court. There are three main reasons why this is important.
First, probate can be very expensive.
Probate is the legal process through which the court ensures that, when you die, your debts are paid and your assets are distributed according to the law. Legal fees, executor fees, inventory fees (county taxes), and other costs have to be paid before your assets can be fully distributed to your heirs.
If you own property in other states, your family could face multiple probates, each one according to the laws in that state. We usually expect about 10% of your estate to be eaten up in probate court through legal fees, inventory fees, court costs etc. For smaller estates, the percentage can be much larger – sometimes leaving little behind for your loved ones.
These costs can vary widely, but we’ve had clients who had to pay tens of thousands of dollars throughout the probate process. In general, probate is much, much more expensive than doing some simple estate planning in advance.
Second, probate can take a long time.
The standard probate process takes a minimum of 5 months to complete. However, over the past decade we’ve experienced that it generally takes 9 months to a year to resolve simple cases (and several years for contested cases). We once represented a client whose Probate lasted for 8 years.
Third, probate is public.
Your family has no privacy. Probate is a public process, so anyone can see the size of your estate (often what you actually owned), who you owed debts to, who will receive your assets, and when they will receive them. The process invites upset heirs to contest your will and can expose your family to greedy creditors and potential fraudsters.
Keep Your Financial Matters Private
Since there is no probate court process when you have a living trust, there is no need to make your assets public. On the other hand, if your house is only included in a will, the will’s contents are made public when it is entered in probate court. Since the trust avoids probate, the contents of the transfer stay private. In general, the only people who will ever see the living trust, are the beneficiaries that you name. And even then, only after you pass.
If you become incapacitated during your life, then a living trust can protect your family from undergoing a conservatorship. A conservatorship is when a court-appointed guardian is given the authority to manage an incapacitated person’s financial matters for them.
This feature of a living trust is especially comforting to families in times of difficulty since they do not have to worry about going to court and requesting access to the incapacitated person’s finances. A revocable living trust gives the family one less problem to face when someone becomes incapacitated.
If the trust is set up as an individual trust, then the trustee can take over and manage the assets. If the trust is owned by a married couple, then the second spouse will usually step in as the acting trustee.
It is also prudent to have a durable power of attorney for finances in addition to a living trust to grant the new acting trustee the power to manage any property and finances outside of the trust.
Putting A House Into A Trust - What Are The Disadvantages?
While the benefits of putting a house into a trust greatly outweigh the drawbacks, it does have some additional complexities…
In order to make your living trust effective, you need to make sure that the ownership of your house is legally transferred to you as the trustee. Since your house has a title, you need to change the title to show that the property is now owned by the trust. To do this you need to prepare and sign a new deed to transfer ownership to you as trustee of the trust. In the end, a little bit of additional paperwork and record keeping is worth much more than the time and money that will be lost in probate, not to mention the stress that your family will have to go through to access your assets after you pass.
Accurate Record Keeping
Once you create a living trust you don’t need separate income tax records if you are both the grantor and the trustee. Any income you receive from property that you are holding in the trust will simply be reported on your personal tax returns. However, if you transfer property in or out of the trust, you need to keep accurate written records. This isn’t difficult, but it’s easy to forget if it has been a few years since you created your trust. The advantages of putting a house into a Trust far outweigh the disadvantages. This is why it is one of the best, simplest, and most commonly used methods for avoiding financial disaster and your passing assets to your loved ones after you’re gone.
Now that we have talked about some of the major pros and cons of putting a house into a trust, we are going to answer some additional questions we get from clients about putting a house into a trust.
One of the main questions we get is…
Is Putting A House Into A Trust Difficult?
Putting a house into a trust is actually quite simple and your living trust attorney or financial planner can help. Since your house has a title, you need to change the title to show that the property is now owned by the trust. To do this you need to prepare and sign a new deed to transfer ownership to you as trustee of the trust.
Besides Putting A House Into A Trust, Are There Other Assets I Should Consider Putting Into A Trust?
Aside from putting a house into a trust, there are other assets you should consider titling in the name of the trust. Usually it’s best to include all real estate, stocks, CDs, bank accounts, investments, insurance and other assets with titles. Some people also include jewelry, clothes, art, furniture, or other assets in a one page assignment.
Will I Lose Control Of My Home When Putting A House Into A Trust?
Not at all, you keep full control of all of the assets in your trust. As Trustee of your trust, you can do anything you could do before – buy and sell assets, gift them away, mortgage them out, and you can still change or even cancel your trust altogether. That’s why it’s called a revocable living trust. You even file the same tax return. Nothing changes but the name on the titles.
How Do I Set Up A Living Trust?
If you need help putting a house into a trust and you’d like to set up a living trust , we can help. Over the past decade, we’ve helped 1,000s of clients set up all matters of living trusts, wills, powers of attorney, and estate plans. We’d be happy to answer any questions you have about whether a living trust is the right estate planning option for you. Just give us a call today at (248) 613-0007 to schedule your complimentary consultation.
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Schedule a free consultation with an experienced living trust attorney today call us now at (248) 613-0007, phone and web meetings available so you don't need to travel, reserve your free consultation today, written by chris atallah - founder, rochester law center, pllc.
Chris Atallah is a licensed Michigan Attorney and the author of “The Ultimate Guide to Wills & Trusts – Estate Planning for Michigan Families” . Over that past decade, Chris has helped 1,000s of Michigan families and businesses secure their futures in all matters of Wills, Trusts, and Estate Planning. He has taught dozens of seminars across the State of Michigan on such topics as avoiding the death tax, protecting minor children after the parents’ death, and preserving family wealth from the courts and accidental disinheritance. If you have any questions, Chris would be happy to answer them for you – just call at 248-613-0007 .
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How to Transfer Property Held in a Trust
Who Can Sign a Deed Transferring Property Owned by a Trust for the ...
Many people transfer real estate, vehicles, investments and personal belongings into trusts as part of their estate planning. Assets held in trust bypass probate when you die so they are transferred to heirs free of court costs and delays. A trust may be revocable, meaning its property can be transferred and managed before the trust maker dies. A trust can also be irrevocable, meaning transfers may not be allowed until the maker dies or other specific events occur.
You must look at the specific language of a trust to determine if property transfers are permitted. For example, Bob and Mary have twin boys in grade school; they place their home in an irrevocable family trust and prohibit its sale if they die until their sons turn 21. Conversely, Sally and George have no children. They place their Florida beach house in a revocable trust for their siblings and leave them the power to make decisions regarding the sale or transfer of the property. Read More: Difference Between a Last Will and a Revocable Trust
Proper documents must be used to transfer ownership of specific trust property. For example, deeds transfer real estate. Vehicle titles transfer cars and trucks, and the backs of stock certificates generally have designated spaces to sign and transfer stock ownership. Each state has its own technical requirements for conveying assets. For instance, ink colors for signatures, and notary and witness requirements can vary for property deeds. Attorneys can answer specific questions regarding preparing documents to transfer trust assets.
Trustees are the parties empowered with the authority to transfer ownership of trust assets. A trust may have one trustee or co-trustees, which is common with married couples. A trust's conditions may require co-trustees to agree to asset transfers, or they may allow co-trustees to act independently on behalf of the trust. A valid transfer requires a trustee to sign all necessary documents pursuant to the authority granted to him under the trust's terms.
Some asset transfers are filed in state or county offices. For example, property deeds are generally recorded in the register of deeds for the county in which the property is located. Generally, vehicle transfers are processed at the department of motor vehicles. Other ownership transfers, such as a bill of sale for a lawn mower or appliance, do not require public filing. An attorney can answer specific questions regarding recording requirements for trust transfers.
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Maggie Lourdes is a full-time attorney in southeast Michigan. She teaches law at Cleary University in Ann Arbor and online for National University in San Diego. Her writing has been featured in "Realtor Magazine," the N.Y. State Bar's "Health Law Journal," "Oakland County Legal News," "Michigan Probate & Estate Planning Journal," "Eye Spy Magazine" and "Surplus Today" magazine.
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How to Transfer Your Property into a Trust
Whether you own a beach cottage in Malibu, a Manhattan penthouse or a lake house in Minnesota, you may want to consider transferring your real estate into a revocable trust.
A revocable trust is an estate planning tool that allows you to provide some control over what happens to your assets when you pass away. This type of trust, also known as a living trust, offers the additional benefit of keeping control of your property while you're alive.
“Placing real estate, including your primary residence, a second home or commercial investment properties, into a revocable trust has become more common in every state over the past 20 to 30 years," said Chris Van Atta, a senior wealth planner with City National Bank. “Historically, trusts were used in California, Texas, Florida and other states to minimize probate time and expense. In states like New York, which has a court-driven probate process, having a revocable trust own your property instead of a will can potentially reduce a time-consuming and expensive probate."
What Are the Benefits of a Revocable Trust?
In addition to streamlining your heirs' access to your property, a trust provides privacy.
Probate is a public process, which means that your will, with all the information about your heirs and what assets they will receive, can be searched by anyone. Placing your real estate in a trust preserves your privacy, said Van Atta, so that no one outside of the trust knows what property you own, who will get it or how much it is worth.
“Retitling your real estate to get it into your trust is especially important if you own property in more than one state," said Van Atta. “If you own the property in your own name, your heirs will potentially have to face probate in more than one state. With a revocable trust, your heirs won't need to go through that process."
Placing your real estate into a living trust also means you can continue to decide what to do with the property while you're alive and can make arrangements for the property in case you become incapacitated.
“Transferring your real estate into a trust is a relatively simple process," said Alma Banuelos, national head of Trust and Estate Services at City National Bank. “If you're married, you need to determine how the property is owned. If you own the property jointly, depending on the state you live in you may want to consider a joint living trust. If you and your spouse have separate assets, you may want to consider individual living trusts."
How to Transfer Real Estate Into a Trust
First, you’ll need to prepare and sign a new deed for the property.
You’ll usually need a grant form or quit claim form to transfer the deed. The forms vary by state and there are some nuances to the process. Work with a lawyer experienced in each state where you own property to ensure that the details are handled correctly.
“You'll need to file a quit claim deed and a change of ownership form that transfers title from your name to the trust," said Banuelos. “If you own several commercial investment properties, you might own each of the properties through an individual LLC to limit your liability. If you establish a living trust, you can transfer 100% of the ownership of each LLC into that trust so that your beneficiaries inherit your interest in each LLC."
Typically, the documents you need to transfer real estate include:
- The recorded deed for your property , which includes the names of the owners and the legal description of the property.
- The first and signature pages of the trust for the accurate name of the trust.
- The names and addresses of the trustees .
- The names and addresses of the beneficiaries of the trust.
Some states have additional requirements. For example, in Colorado, you need a Special Warranty Deed. This states that the grantor (property owner) is the trust itself rather than the trustees of the trust.
After you prepare the deed and have it notarized, your attorney will record the deed in the county property records office. An attorney may charge $500 to $1,000 to handle the deed transfer for you, said Van Atta. Typically, you'll also pay a small fee for recording the deed, such as $100, said Banuelos.
“That small fee is well worth it because you're guaranteeing that your residence and your other property will follow your estate plan in your revocable trust and not be subject to probate," said Banuelos.
Transfer taxes, which are required by many state and local jurisdictions when you sell or give away a property, are generally not incurred when you transfer property into a revocable trust.
“As long as you are transferring the property from the same owners to the same owners and in the same percentages, transfer taxes are not required," said Banuelos. “For example, if my husband and I each own 50% of our home and we transfer it to the trust as 50-50 owners, we wouldn't need to pay transfer taxes."
Mortgage Implications for Real Estate Trusts
If you have a mortgage on the property that you plan to transfer into your trust, this can trigger a “due-on-sale" or “due-on-transfer" clause in your loan.
“Be sure to check with your lender before you transfer your property into a trust," said Van Atta. “Most lenders are flexible on this and won't expect you to pay your loan in full immediately."
In most cases, when you retitle the property to put it into a trust with the same ownership, that won't require an acceleration of your loan repayment, said Banuelos.
However, if you are splitting the property in a new ownership percentage, such as in a divorce, or gifting the property, that is likely to trigger a due-on-transfer clause, she said.
Alert your mortgage lender when you transfer your deed into your trust, even if no accelerated repayment is required.
Tax and Insurance Impacts of Real Estate Trusts
Before transferring your property into a trust, check with your title insurance company.
Depending on your location and the title company, transferring the deed to your trust could require an endorsement on your title insurance policy or even necessitate the purchase of a new title insurance policy because of the change of ownership. An endorsement on your title insurance policy can cost as little as $100.
Transferring your real estate into a trust should not require other changes to your property taxes or your insurance. But you do need to provide information to your insurance company and keep all documentation of the transaction.
“You don't lose the benefit of a step-up in basis of your property in the event of your death for property held in a revocable trust nor will your property tax assessment change if 100% of the property is going into your own trust." said Banuelos. “However, it is important to retain the documentation showing this change in ownership. You must file a change of ownership status that clearly states that the ownership is a simple transfer to a trust. If you don't, this could trigger a property reassessment."
Alert your homeowner's insurance carrier about the transfer of ownership of your property to the trust, said Van Atta.
“Your premiums and your homeowner's policy shouldn't change, but the company does need the policy to reflect the appropriate ownership status," Van Atta said.
When you establish a trust, your estate planner will ask you about your assets and help you transfer them into a trust. If you buy additional property once your trust is open, you may want to put that new acquisition into the trust as well.
With the help of an estate planner, protecting your property with a living trust can be a simple process that will ease the burden on your heirs.
This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.
City National, its managed affiliates and subsidiaries, as a matter of policy, do not give tax, accounting, regulatory, or legal advice, and any information provided should not be construed as such. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. Any strategies discussed in this document were not intended to be used, and cannot be used for the purpose of avoiding any tax penalties that may be imposed. You should consult with your other advisors on the tax, accounting and legal implications of actions you may take based on any strategies or information presented taking into account your own particular circumstances. Trust services are offered through City National Bank.
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Transferring assets into a living trust: Can you do it yourself? by Brette Sember, J.D.
Transferring assets into a living trust: Can you do it yourself?
You may have established a living trust, but it's not functional until you transfer ownership of your assets to it.
Ready to start your estate plan?
by Brette Sember, J.D. updated March 02, 2023 · 4 min read
Setting up a living trust is the first step to having your assets owned by your revocable living trust. Funding a living trust means that your assets are transferred to the trust and are officially owned by it so the trust can function as you intended it to.
Changing ownership of a trust
When you transfer assets to a living trust you are changing legal ownership of your assets from your name to that of the trust. Most people create a living trust with themselves as trustee, so you will still be able to use and control your assets, but they will technically be owned by the trust. Note that items in the trust will continue to be assigned to your social security number. To get started, you’ll want to make a complete list of the assets you want to transfer so that you are sure you don’t leave anything out.
Transferring real property to a trust
One of the largest assets most people own is their home, and this is likely an asset you want to transfer into your trust. You can transfer your home (or any real property) to the trust with a deed, a document that transfers ownership to the trust. A quitclaim deed is the most common and simplest method (and one you can do yourself). Alternatively, a warranty deed ensures you have good title when you transfer it and may make it easier for your trust beneficiaries to sell the home down the line.
You will want to check with an attorney about which type of deed is best in your situation. Some states require that all deeds be prepared by attorneys so you may not have a self-help option. Once the deed form is prepared, a real estate deed must be filed with your county and you will need to pay a filing fee.
A deed transfer should not affect your mortgage, even if you have a due on sale provision. You should check on your title insurance (if you have any) though . You may be able to simply transfer it to the trust, or your title insurance company may require that the trust buy a new policy.
Once the deed is transferred, you may need to change your homeowner’s insurance to indicate the trust as owner of the property. If you receive a real estate tax exemption, you will want to make sure that is properly applied by showing documentation of the trust to the taxing authority, such as a certificate of trust (a document your attorney can create that certifies the existence of the trust).
Transferring vehicles to a trust
If you would like to transfer ownership of your car or truck to your trust, you need to first determine if your state will allow a trust to hold ownership of a vehicle (check the DMV web site or consult your attorney). You also should call your insurance company to be certain they will continue coverage once the transfer is made. To transfer ownership, you will need to obtain a title change form from your DMV and complete it, naming the trustee (as trustee of your trust) as new owner. Sales tax should not apply to the transfer and if the clerk tries to apply it, you will need to speak to a supervisor. If you own a boat, you will need to follow a similar procedure to transfer title.
Transferring financial assets to a trust
To transfer assets such as investments, bank accounts, or stock to your real living trust, you will need to contact the institution and complete a form. You will likely need to provide a certificate of trust as well. You may want to keep your personal checking and savings account out of the trust for ease of use.
Transferring personal property to a trust
You likely own many things that you don’t have actual written titles or ownership documents for, such as jewelry, furniture, collectibles, and the miscellaneous things that fill your home. To place them in your living trust fund, you can name them in your trust document on a property schedule (basically a list you attach to the trust document that is referred to in the document) and indicate that their ownership is being transferred to the trust. If any of these items are insured, be sure to transfer the insurance to the name of the trust.
What cannot be placed in a trust?
There are some things that cannot or should not be placed in your trust. Individual Retirement Accounts (IRAs) cannot be owned by a trust , so these must remain in your own name, but you can name the trust as a primary or secondary beneficiary. Revocable living trusts are often named as beneficiaries of a life insurance policy. It's a good idea to talk to a lawyer or accountant to understand any tax implications of doing so.
If you purchase or inherit items after you create the trust, you may want to transfer those items to the trust as soon as possible. If possible, when you purchase items, purchase them as trustee of the trust so they are automatically placed in the trust.
Consider a pour-over will
To further protect yourself, you will want a pour-over will . This last will and testament can be prepared by your attorney and will indicate that any items left in your name are transferred to the trust upon your death, so that your trust will be complete and provide all the benefits you created it for.
Double-check your list of assets to be certain you have moved them to your trust. Ensuring that your living trust is properly funded will provide you with the protection you seek and the peace of mind that your affairs are in order.
About the Author
Brette Sember, J.D.
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Trust & Estate Planning
What Is Trust Property? Definition in Real Estate and Trust Types
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
What Is Trust Property?
Trust property refers to assets that have been placed into a fiduciary relationship between a trustor and trustee for a designated beneficiary . Trust property may include any type of asset, including cash, securities, real estate, or life insurance policies. Trust property is also referred to as "trust assets" or "trust corpus."
- Trust property refers to the assets placed into a trust, which are controlled by the trustee on behalf of the trustor's beneficiaries.
- Trust property removes tax liability on the assets from the trustor to the trust itself, in some cases.
- Estate planning allows for trust property to pass directly to the designated beneficiaries upon the trustor's death without probate.
Understanding Trust Property
Trust property is typically tied into an estate planning strategy used to facilitate the transfer of assets upon death and to reduce tax liability . Some trusts can also protect assets in the event of a bankruptcy or lawsuit.
The trustee is required to manage the trust property in accordance with the trustor's wishes and in the beneficiary's best interests. A trustee can be an individual or a financial institution such as a bank. A trustor sometimes called a "settlor" or "grantor" can also serve as a trustee managing assets for the benefit of another individual such as a son or daughter.
Regardless of the role a trustee plays, the individual or organization must abide by specific rules and laws that govern the functioning of whichever type of trust is established. Once property has been transferred to a trust, the trust itself becomes the rightful owner of the assets. In an irrevocable trust, the assets can no longer be controlled or claimed by the previous owner.
Types of Trusts
There are several different types of trusts individuals can establish. But they typically fall under two categories, which are revocable trusts and irrevocable trusts .
In a revocable arrangement, the trustor maintains legal ownership and control of trust assets. For this reason, the trustor would be responsible for paying taxes on the income those assets generate and the trust may also be subject to estate taxes should its value breach the tax-exempt threshold at the time of the grantor's death.
With an irrevocable trust, the trustor passes legal ownership of the trust assets to a trustee. However, this means those assets leave a person's property effectively lowering the taxable portion of an individual's estate. The trustor also relinquishes certain rights to mend the trust agreement. For example, a trustor usually can't change beneficiaries of an irrevocable trust after they have been established. This is not the case with a revocable trust.
A trustor may be referred to as grantor or donor in certain situations.
Payable on Death (POD) Trust
Trusts can be created during an individual's lifetime, or they can be established following the grantor's death. This situation applies to Payable on Death (POD) trusts, which transfer assets to a beneficiary following the death of the trustor. Generally speaking, this type of trust and similar ones are called testamentary trusts because property is actually transferred following the trustor's death. Assets in these trusts flow directly to the intended beneficiaries following the trustor's death, which means they avoid the often long and expensive process of probate . Probate is the legal process of validating and distributing assets outlined in a will. These trusts can also be outlined in a person's will .
Assets within living trusts can be transferred during the trustor's lifetime. For example, several individuals open accounts in trust with banks for the benefit of their children or to help fund their college expenses. A trustee carefully manages the assets held in the account to achieve this goal, but the children don't have complete access to the funds or the freedom to spend income from the fund as they please. An example of this type of arrangement is a unified gift to minors act (UGMA) account. In some cases, beneficiaries such as children would have access to the trust's assets and the income they generate only after reaching a certain age.
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- Estates That May Need Formal Probate
One of the ways to decide if you can use a simplified procedure to transfer property is to figure out whether any of the assets have named beneficiaries. That means that the decedent, when alive, named one or more people as beneficiaries to receive the asset when they died. We listed some examples earlier, but here are some common ones:
- Life insurance proceeds,
- Retirement accounts, pensions, or annuities
- Bank accounts
- Property in a living trust
Another important way is to figure out how the property is owned (the type of title ownership). For example:
- Was the property owned in joint tenancy? If so, the surviving owner gets the entire property.
- But, it can get complicated. If the asset was community property but there was no explicit right of survivorship, the decedent’s spouse or partner may get the decedent’s half, but it will depend on whether there is a will and the property was divided in other ways. It may also be necessary to make sure that the property is in fact community property and was not somehow changed to separate property through an agreement or in some other way. You may need to talk to a lawyer to sort out these questions.
- Was the bank account owned by different people? Or was it to be transferred to one person upon death?
Benefits like social security survivor benefits or benefits as a dependent of a deceased veteran can usually be collected without probate court.
It can be difficult to figure out whether you can use a simplified informal process to transfer property. In addition to assets that already have a designated beneficiary (like a life insurance or a bank account), estates with a value of $166,250 or less may qualify for a non-formal probate case. Also, if you were married to, or in a registered domestic partnership with, the decedent, you may be able to follow a simple process to have your property rights determined. Click on the items below for more information on these situations.
Generally, though, deciding if you qualify for a simple procedure may be difficult. So talk to a lawyer if you are not sure. To find a lawyer, contact your local bar association's lawyer referral service or call 1-866-442-2529.
If The Person Who Died Left $166,250 or LESS
- Keep in mind, this process CANNOT be used for real property, like a house or land. Talk to a lawyer for help to determine whether you may be able to use another simplified procedure to transfer real property.
To use the simplified process for transferring personal property:
First, figure out if the value of all the decedent’s property (the estate) is $166,250 or less. To do this:
- All real and personal property.
- All life insurance or retirement benefits that will be paid to the estate (but not any insurance or retirement benefits designated to be paid to some other person).
Do not include:
- Cars, boats or mobile homes.
- Real property outside of California.
- Property held in trust, including a living trust.
- Real or personal property that the person who died owned with someone else (joint tenancy).
- Property (community, quasi-community, or separate) that passed directly to the surviving spouse or domestic partner.
- Life insurance, death benefits or other assets not subject to probate that pass directly to the beneficiaries.
- Unpaid salary or other compensation up to $16,625 owed to the person who died.
- The debts or mortgages of the person who died. (You are not allowed to subtract the debts of the person who died.)
- Bank accounts that are owned by multiple persons, including the person who died.
For a complete list, see California Probate Code section 13050 .
If the total value of these assets is $166,250 or less and 40 days have passed since the death, you can transfer personal property by writing an affidavit. There is a special form for this that you can get from most banks and lawyers. Your court’s self-help center may also have this form or a sample you can use to guide you.
To use to Affidavit process:
1. Fill out the Affidavit.
Many banks and other institutions have their own affidavit. So, check with them first and ask for one. Your court's self-help center may also have this form or click for a sample form you may be able to use .
- You can list all assets in one affidavit. Or you can do one affidavit for each asset.
2. Attach (to the affidavit):
- A certified copy of the death certificate of the person who died.
- Proof that the person who died owned the property (like a bank passbook, storage receipt, stock certificate).
- Proof of your identity (like a driver's license or passport)
- An Inventory and Appraisal ( form DE-160 ) of all real property owned by the decedent in California. You will need to get this form signed by a probate referee. If there is no real property, then you do not need this form.
3. Have the affidavit notarized.
Legally, you are not required to have the affidavit notarized BUT many institutions will ask you to, so it is a good idea to notarize it before you try to use it to transfer the property.
4. If there are other people entitled to inherit the property, they MUST also sign the affidavit.
This shows you all agree that the property listed on your affidavit can be transferred to you.
5. To have the property transferred to you, give the affidavit to the person, company, or bank that has the property now.
NOTE: Make sure the case is not already in probate court. If it is, you cannot use the affidavit process unless the personal representative of the estate agrees in writing to let you do so.
If You Were Married to or Were a Registered Domestic Partner of the Person Who Died
- What your share of the community property is; and
- What part of your deceased spouse or partner’s share of community and separate property belongs to you.
If the surviving spouse/partner is legally entitled to all of the property, a more complicated probate procedure may not be required. For example, a couple that was married for decades may only own “community property,” which belongs to the surviving spouse/partner and is confirmed by the court in the spousal property petition case.
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How Do I Transfer Property from One Trust to Another Trust?
Unlike a last will and testament, estate planning through a living trust involves the transfer of title to assets during your lifetime. For example, if you want your house to be part of a revocable living trust, you must execute and file a new deed transferring ownership from yourself to the trustee—which in most cases is also you. Failure to properly transfer an asset means a probate court may determine it is not part of the trust at all and should pass instead under your will.
San Diego Court Finds New Trust Sufficient to Transfer Real Estate
What about cases where you create a new trust and want to transfer assets into it from an earlier trust? A San Diego appeals court recently addressed this question. In this case a man, now deceased, created a revocable living trust in 1985, into which he transferred a parcel of real property located in San Diego. The man created a second, irrevocable trust in 2009, which listed the same property on the schedule of trust assets. The man did not, however, sign a deed transferring the property from the 1985 trust to the 2009 trust.
After the man’s death, litigation ensued among the man’s relatives over which trust actually owned the property. This was important because each trust named different successor trustees and beneficiaries. The man’s daughter sought probate court approval for the 2009 trust. His grandson argued in favor of the 1985 trust.
The probate court agreed with the grandson’s argument that the San Diego property was never properly transferred from the 1985 trust to the 2009 trust. The daughter appealed. On April 13, the California Fourth District Court of Appeal issued a published decision reversing the probate court and siding with the daughter. First, the Fourth District said the deceased was not required “to execute a separate deed in order to transfer the [San Diego] property to the 2009 trust.” The deceased’s statement in the 2009 trust that, “I transfer to my Trustee the property listed in Schedule A, attached to this agreement,” was sufficient to manifest his intent “to convey real property in California.”
Second, given that the deceased was the “sole trustee” of the 1985 trust, and that trust was revocable at any point during his lifetime, the Fourth District held that his “signature on the 2009 trust was ‘sufficient to convey good title’” from one trust to the other.
Get Advice from a California Estate Planning Lawyer
The Fourth District’s decision does not mean you should ignore the formalities of transferring assets into a trust—or even from one trust to another trust. The circumstances of each person’s estate planning differ. For instance, if you create a living trust where you and your spouse are co-trustees, there may be language that requires approval from both of you before transferring any property out of the trust.
An experienced San Diego estate planning attorney can review your situation and help you decide on whether a trust may be beneficial. Contact the Law Office of Scott C. Soady if you would like to speak with an estate planning lawyer today.
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This page tells you about:
- What is a trust?
- What is a trustee?
- What powers does a trustee have?
- What duties does a trustee have?
- What does a trustee need to do when the settlor dies?
- What is a trust beneficiary?
- What rights does a beneficiary of a trust have?
- When does a trust end?
- Can a trust be canceled or changed?
- What if the trustee won't tell me what is going on?
- What can the court do if the trustee is not doing his or her job?
- Can a trustee resign?
- What if the acting trustee dies or resigns or can no longer be the trustee?
- How can I find out if someone has a trust?
- How do I know if a particular asset is in the trust or not?
- What happens if the settlor dies without having put some of his or her assets in the trust?
- Can I challenge or contest a trust?
- What if the settlor or a beneficiary of the trust owes me money?
- Can the Court help me if I have a question or concern about the proper interpretation of the trust or how the trustee is administering the trust?
- What is a trust? A trust is when one person (trustee) holds title to property for the benefit of another person (the beneficiary). A person called the settlor (or trustor) creates the trust and puts the property in the trust. The settlor, trustee, and beneficiary can be different people. But, one single person could be the settlor, trustee and beneficiary. For example, one person may create a trust and put property in it, make himself the trustee, and use the property for his own benefit. In that case he would be the settlor, trustee, and beneficiary all at the same time.
- What is a trustee? The trustee is the person (or people) who holds legal title to the property that is in the trust. The trustee’s job is to manage the property in the trust for the benefit of the beneficiaries in the way the settlor has asked.
- make reasonable repairs,
- insure the property,
- sell assets,
- make prudent investments,
- pay certain administrative bills and expenses, and
- make distributions and payments to the beneficiaries according to the trust document.
To read more about the law on a Trustee’s powers, refer to the California Probate Code .
- Do what the trust document says as long as it is legal;
- Do only things that benefit the beneficiaries;
- Not favor one beneficiary over another;
- Avoid conflicts of interest with the beneficiaries
- Never use trust property or the trustee's powers for personal benefit, unless the trust authorizes it;
- Keep trust property separate from property owned by anyone else;
- Not delegate to others anything they can reasonably do themselves (if the trustee must delegate some duties, s/he must supervise what the delegated person does);
- Administer and invest the assets of the trust with reasonable care and skill to protect the trust and to accomplish the purposes of the trust as determined from the trust instrument;
- Diversify investments unless under the circumstances it would not be prudent to do so;
- Make proper determinations of what is income versus principal when the trust directs that they be distributed differently as required by Probate Code Sections 16320 - 16375 .
- The settlor's name and the date the trust was signed;
- The name, address and telephone number of each trustee of the trust;
- The address where the administration of the trust will take place;
- Any additional information the trust document might require;
- That the recipient can ask for and receive from the trustee a complete copy of the trust; and
- That the recipient has a deadline of 120 days after receiving the notice, or 60 days after a copy of the trust is mailed or served upon the recipient, whichever is later, to start a legal action to object to the trust.
For more information, see California Probate Code Section 16061.7 . Notice to Assessor's Office : If the trust property includes real estate or a manufactured (e.g. mobile) home that is subject to property taxation in California, the trustee must give written notice to the Assessor's Office of the county where such property is located within 150 days of the settlor's death. For more information, see California Revenue and Taxation Code Section 480(b) . Notices to Victim Compensation Board and Director of Health Services : If the settlor may have received health care benefits from the State of California (e.g., from Medi-Cal), the trustee must give written notice of the Settlor’s death to the Director of Health Services within 90 days after the settlor’s death ( Probate Code Code Section 215 ). Further, if any of the any of the settlor’s heirs (e.g., trust beneficiaries) are confined in a prison or other correctional facility, the trustee must give written notice to the Director of the California Victim Compensation and Government Claims Board within 90 days of the settlor’s death ( Probate Code Section 216 ). Inventory and determine value of assets : If there is no court-appointed executor for the estate of the deceased settlor, in most case the trustee must make an inventory and determine the value of all the settlor's assets as of the date of death (whether or not the assets were in the trust). This may often require formal appraisals of assets that do not have a readily determinable value, such as real estate or business interests. The trustee does this to see if federal and/or state estate tax returns need to be filed. If they do, the trustee will need to make sure the return(s) get filed and that any taxes owing get paid within nine months of the settlor's death. The inventory and valuation of the trust assets are also important for purposes of fulfilling the trustee’s duty to ultimately prepare and submit to the beneficiaries an appropriate written accounting as required under Probate Code Sections 16062-16064 . Follow trust instructions : The trustee also must do anything the trust instructs (unless what is instructed might be against the law). Often, the trust says the successor trustee will take care of paying for the settlor's funeral expenses, and the settlor's outstanding debts (like, recent medical expenses and credit card bills), and then distribute what is left to the beneficiaries of the trust. Sometimes, the beneficiaries have the right to get most or all their inheritance through the trust within days or weeks of the settlor's death. In other cases, the trustee may delay distributing property in order to:
- Sell property to pay the settlor's final bills or taxes,
- Calculate the distribution required by the trust, or
- Determine if there will be other debts or taxes to pay at a later date.
Some trusts say the trustee cannot distribute the assets for a certain number of years, or until the death of someone else. In these cases, the trustee is responsible for investing the assets of the trust, perhaps making periodic distributions to the beneficiaries (if allowed or required by the trust), until all assets of the trust are distributed to the beneficiaries. Attend to Tax Issues : Unless there is a court appointed executor of the settlor’s estate (e.g., in order to administer assets that the settlor did not have in his or her trust), as mentioned above, the trustee will be responsible to evaluate whether any estate tax returns are required to be filed, and to make sure that they are properly and timely prepared and filed, and that any estate taxes owing are paid within 9 months of the settlor’s death. In addition, the trustee will likely have the duty to ensure that the settlor’s income tax returns (e.g., final State and Federal income tax returns for the calendar year during which the settlor died) are duly filed and prepared, and that any income taxes due are timely paid. Further, the trustee will need to arrange for the preparation and filing of the trust’s income tax returns to properly report income that was earned after the settlor died and before the trust assets are all distributed out to the beneficiaries. Incident to doing this it will usually be necessary to apply for and obtain a new tax ID number for the trust from the IRS (kind of like a “social security number” for the trust). That number should be given to the financial institutions holding the trust’s assets so that each financial institution will ultimately report the interest and dividend income on the trust’s tax ID number (instead of, for example, the settlor’s or the successor trustee’s social security number).
- What is a trust "beneficiary"? A beneficiary of a trust is a person who by the terms of the trust has the current or future right to have the trustee pay out cash or other trust property to him or her. He or she is one of the people for whom the trust was established.
- The right to receive notice of the existence of the trust.
- The right to receive a copy of the trust.
- The right to receive trust accountings and information about the beneficiary's interests in the trust.
- The right to enforce the terms of the trust and to hold the trustee accountable for any wrongful acts or omissions that affect that beneficiary's interests.
- The term of the trust expires,
- The trust purpose is fulfilled,
- The trust purpose becomes illegal,
- The trust purpose becomes impossible to fulfill, or
- The trust is revoked.
If the trust ends, the trustee will continue to act as trustee until s/he finishes up the affairs of the trust.
- if the trust must continue in order to carry out the purpose of the trust
- if the reason for changing or ending the trust outweighs the interest in carrying out the purpose of the trust
If the settlor and all beneficiaries consent : The law says if the settlor and all beneficiaries consent, they can change or end the trust. If any beneficiary does not consent to change or end the trust, the other beneficiaries, with the consent of the settlor, can petition the Court to partially change or end the trust as long as the interests of the beneficiaries who do not consent are not seriously affected. If the trust has uneconomically low principal : If the Court decides it is costing more to administer the trust than the trust is worth, the beneficiary or trustee can ask the Court to end or change the trust, or appoint a new trustee. If the trust principal is worth $20,000 or less, the trustee can end the trust. Change or end the trust if circumstances change : The law says the Court may change or end a trust if circumstances have changed and continuing the trust would defeat or weaken the trust.
- What if the trustee won't tell me what is going on? The trustee must keep the beneficiaries informed about the trust and its administration. If you make a reasonable request for information, the trustee must give you a report about the assets, liabilities, receipts and disbursements of the trust, what the trustee has done, money paid to the trustee, any agents hired by the trustee, their relationship to the trustee and any pay they received, and information about your interest, including a copy of the trust. If you waived (gave up) your right to information, you can withdraw your waiver in writing and get the most recent report and all future reports. If it has been 60 days or more since your written request for a report and the trustee hasn't given you a report, you can file a petition to ask the Court to make the trustee file a report. Even if the trust itself says the trustee does not have to give you a report, the Court can make the trustee give you a report if you show that the trustee may have violated his/her duties. If the trust is revocable, or if you waived in writing your right to a report, the trustee does not have to provide information unless the trust document says s/he must.
- Breach of trust;
- Trustee has more debts than assets or is otherwise unfit to act as trustee;
- The trust cannot be administered because of hostility or lack of cooperation between co-trustees;
- The trustee does not want to be the trustee;
- The trustee's payment is excessive;
- The law says some people must be disqualified from serving as a sole trustee. The people who cannot serve as a sole trustee are listed in Probate Code Section 21360 .
The beneficiary has three years from the date of receiving the trustee’s report to ask the Court to remove the trustee for any causes for removal that might be revealed by the report. For more information, see Probate Code Section 17200 .
- As explained in the trust document;
- If the trust is revocable, by getting the person who has the power to revoke the trust to consent;
- If the trust is irrevocable, by consulting with all adult beneficiaries; or
- By getting a Court order after filing a petition asking the Court for permission to resign.
Unless the beneficiaries say they do not want one, the trustee must file an accounting of all trust transactions while he or she was acting as trustee.
- What if the acting trustee dies or resigns or can no longer be the trustee? If a trustee dies or resigns, is conserved or is declared “incompetent” by a court, or files for bankruptcy, then the trustee can no longer act as trustee and must be replaced. Some trusts have two or more co-trustees and the trust may say that the remaining co-trustee will be the sole trustee, or may say how a new trustee will be appointed. If the vacancy cannot be filled, then a trust company may agree to serve if all adult beneficiaries agree. If that fails, any person who has a financial stake in the trust or any person named as trustee can file a petition to have a trustee appointed. Any beneficiary who is 14 years of age or older can nominate a trustee, even though a minor under the age of 18 is not legally qualified to serve as trustee. The public guardian cannot
- be appointed as trustee of any trust unless the Court finds that no other qualified person is willing to act as trustee.
- How can I find out if someone has a trust? If you have legal access to the person's files and papers, look through them to see if there are any trust documents, or any references to a trust. Look for copies of deeds, bank or securities account statements that name a trust as the owner, or a Will that refers to a trust. Also look for papers that name an attorney, and call the attorney to see if he or she has any record of a trust. You can also visit the County Clerk-Recorder's Office or contact the County Assessor's Office to see the title on real estate owned by the person to see if it is held in the name of a trust.
- How do I know if a particular asset is in the trust or not? To know if someone’s house or other real property is in a trust, go to the County Clerk-Recorder's Office or contact the Public Service Unit of the County Assessor's Office at (408) 299-5500 . It is not easy to trace the ownership of bank accounts, brokerage accounts, and personal property. Only the owner has a right to get copies of statements from a bank or other institution.
- You believe the settlor was pressured into creating or signing the trust.
- You think the settlor was not competent when s/he signed the trust.
- The person (other than the settler) who helped set up the trust will benefit from the trust.
- Determine the validity of terms of the trust.
- Identify the beneficiaries and determine who gets property, and when they get it, if the trust does not specify that information.
- Settle the accounts and review the acts of the trustee.
- Tell the trustee to do something, like report about the trust or account to the beneficiary.
- Grant powers to the trustee.
- Determine or review a trustee’s pay.
- Appoint or remove a trustee or accept a trustee’s resignation.
- Make the trustee pay for losses to the trust or a beneficiary that are the trustee’s fault.
- Approve or direct a change in the trust, or end the trust.
- Approve or direct combining or dividing trusts.
- Change the trust to make a decedent's estate qualify for the charitable estate tax deduction under federal law.
- Authorize transfer of a trust or trust property to or from another state or country.
- Direct transfer of a testamentary trust from one county to another.
- Approve removal of a testamentary trust from court supervision.
- Determine the reasonableness of payments for legal services.
You can petition the Court for other reasons, too. For more information read California Probate Code Section 17200 . The law says the trustee or any interested person can file a petition if:
- The trustee has or holds title to real or personal property, and another person makes a claim against all or some part of that property.
- Another person has or holds title to real or personal property and the trustee makes a claim against all or some part of that property.
- A creditor of the settlor of the trust makes a claim against the trust.
See California Probate Section 17200.1 and Section 850 .
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Can I Transfer Property into a Trust?
If a trust is part of your estate plan, your assets will need to be transferred into it at some point. Most of the time, this is a fairly simple process that requires nothing more than listing the assets as part of the trust. However, transferring real estate property into a trust is more complicated. A new deed has to be issued and filed, insurers must be notified and, sometimes, permission must be obtained from the lender. Failure to properly transfer real property like a person's home into a trust means your estate will have to go through probate after your death, likely adding considerable time and expenses to the process of settling your estate. Talk to a financial advisor about your plans for your estate.
Trusts are widely used in estate planning so estates can avoid going through probate and maintain privacy. The terms of the trust ensure the wishes of the property owner are adhered to and their property gets distributed to the proper beneficiaries.
There are many different types of trusts , including living trusts, revocable and irrevocable trusts. However, they all become effective when assets are transferred into them.
There are some restrictions on the types of assets that can be transferred into trusts. For example, IRAs can't be placed directly in a trust like other assets can (although the same effect can be achieved by naming an IRA as the beneficiary of the trust ).
Otherwise, assets that can be placed in a trust include:
Cash and bank accounts
Securities such as stocks and bonds
Collectibles, art and other personal property
Placing personal property like jewelry, furniture and, sometimes, vehicles, can be as simple as including the property on a list of assets drawn up when the trust is created.
Other asset transfers can be more complicated. Stock and bond transfers are generally handled through a brokerage or the financial institution that is holding them for the owner. Life insurance is often not included in a trust. Instead, the beneficiary designations of the policy may be changed to name the trust as the recipient of the payout.
Transferring Real Property into a Trust
Real property , including a person's personal home and any real estate investments, calls for a different set of steps. Essentially, a new deed has to be created that names the trust as the owner of the property. The new deed also must be recorded at the courthouse.
The transfer can be accomplished with two types of deeds. A quitclaim deed is the easiest and most commonly used. It is often possible for a trust owner to create a quitclaim deed without the help of an attorney. The other type, a warranty deed , involves a guarantee that the person transferring ownership has the right to do so and that no outstanding liens will interfere with the transfer. Warranty deeds cost more because involve checking for liens.
Once either type of deed is prepared, it must be signed by the owner, witnessed by a notary and recorded at the county courthouse. Only then will the property be transferred to the trust.
Property Transfer Considerations
A number of problems can arise when transferring property to a trust. First, the transfer may not happen or may not be effective. This could happen if the owner sold a house that had been transferred to the trust, but then bought a new house and failed to transfer it into the trust. Any new real estate purchases should be recorded with the trust as the owner. If this step is neglected before the estate owner dies, there is no way to avoid probate.
Another problem may crop up if the property is not accurately described. The legal description of the property must be exactly correct for the transfer to take place.
Some mortgages have due-on-sale clauses that require the loan to be paid off if the property is sold or otherwise transferred. To avoid this, check with the mortgage holder and get permission before transferring property into a trust. Lenders will usually agree without calling the loan, but the formality needs to be observed to avoid potential problems.
Similarly, the issuer of any homeowner's or other insurance policies on the property should be notified of the ownership change. This usually can be handled with a phone call to the insurance agent or broker.
The Bottom Line
Transferring real estate property into a trust is often an important part of estate planning. If neglected, this can force the estate to go through probate, which may increase costs and compromise the estate owner's privacy. Transferring real estate involves issuing a new deed that names the trust as the owner. The new deed then must be registered at the county courthouse.
Estate Planning Tips
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You can pay an attorney thousands of dollars to create a trust as part of your estate plan. For many people, especially those with large or complex estates, this is likely the best approach. However, for those with smaller and more simple estates, online trust-making tools can reduce those costs to as little as zero while producing a legally enforceable document that gets the job done.
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Quitclaim Deeds - What You Need to Know
Quitclaim deeds are a reliable way to transfer ownership of real property from one party to another. Learn more about quitclaim deeds here.
Patrick Hicks , @PatrickHicks
Head of Legal , Trust & Will
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There are a few different methods that can allow you to transfer property and change ownership. One such method, called a quitclaim deed, lets homeowners quickly transfer a property title. This information can be useful for a number of reasons, including as part of an Estate Planning strategy for yourself or a loved one.
Quitclaim deeds are a common but occasionally misunderstood legal tool, and they can be used in several situations. They are known to be one of the quickest methods for transferring property ownership -- but there are a few things to be aware of first. Keep reading to learn everything you need to know about quitclaim deeds and when to use one.
[Are you interested in our deed transfer services? Chat with our member success team or reach out to [email protected] "> [email protected] ]
What is a quitclaim deed?
How does a quitclaim deed work?
Commonly asked questions about quitclaim deeds
Quitclaim deeds & Estate Planning
What is a Quitclaim Deed?
A quitclaim deed is a type of legal document that transfers real estate or land ownership from one individual to another. They are commonly referred to as “quick claim” deeds because of the fast nature of the transactions. In cases where a quitclaim deed is used there is no need for a title search or title insurance, and the property is transferred in as-is condition.
How Does a Quitclaim Deed Work?
A quitclaim deed works by allowing one property owner to sign ownership over to another through a legal contract. The process is completed through the creation of a quitclaim deed form, which should include a description of the property, the date of the transfer, and the names of the individuals exchanging the title. The original property owner, called the grantee, can then sign the deed form to transfer ownership to the new owner, called the grantor.
Quitclaim deeds almost always need to be notarized, and in some states a witness is also necessary. The deed should then be filed with the county clerk to ensure the change in ownership is publicly recorded. The exact process can vary slightly depending on the state the property is located in, but this is generally how a quitclaim deed works.
Who Needs a Quitclaim Deed & When to Use?
Quitclaim deeds can be used in a number of different situations, though they are most common when transferring property between family members or spouses. For example, after a divorce one spouse may sign a quitclaim deed to officially sign over ownership of the home.
In Estate Planning, quitclaim deeds can be used to transfer real estate into a Living Trust. It is often important to gain Trustee "> Trustee approval before moving real estate into a Trust, as quitclaim deeds do not impact existing mortgages. If you are interested in learning more, read our guide on how to transfer real estate into a Living Trust "> how to transfer real estate into a Living Trust .
Quitclaim deeds can also be used to quickly reissue a real estate title in case mistakes were made during the initial transaction. Common examples include spelling errors or missing signatures on the title, which can be corrected through the use of a quitclaim deed.
What are the Advantages of a Quit Claim Deed?
Effective Way To Transfer Titles: Quitclaim deeds can quickly transfer a property title between family members, avoiding the need for a real estate attorney or agent.
Gift Tax Benefits: Quitclaim transfers are often treated as gifts for tax purposes, allowing family members to avoid paying the taxes associated with a traditional real estate sale.
Easy To Use: The forms used are easy to understand and often only require a notary and witness signature to legalize.
New Owner Can Avoid Liens: Quitclaim deeds do not transfer mortgages or tax liens on the property. This means the previous owner is still financially responsible for money owed on the house.
Property Skips Probate: When a quitclaim deed is used to transfer a property before the original owner passes away, the property can avoid going through probate. This is most common in situations of a terminal illness or other health condition.
What are the Disadvantages of a Quit Claim Deed?
No Protections For The Transaction: Unlike warranty deeds "> warranty deeds , a quitclaim deeds does not offer protections for the new property owner. There is no way to guarantee that the property is owned free and clear, and that there are no easements or restrictions. In some cases, the grantor may be withholding other information as well. In these cases, there is not much the buyer can do unless the deed was fraudulent.
Responsibility Placed On The New Owner: The new owner can opt to complete a title search before signing a quitclaim deed to protect themselves from difficulties. Essentially, it is up to the grantee to ensure the information on the property is correct before agreeing to the new deed.
For these reasons, it is advised to only use quitclaim deeds when transferring property between family members or trusted individuals. A quitclaim deed would almost never be used during a typical real estate sale, as there is no guarantee that the previous owner has disclosed all of the relevant information about the property.
Other Commonly Asked Questions About Quitclaim Deeds
Quitclaim deeds are a relatively common tool within Estate Planning, as they facilitate a quick property transfer. Keep reading to learn the answers to other commonly asked questions about quitclaim deeds.
Does a Quitclaim Deed Avoid Probate?
A quitclaim deed avoids probate because property ownership is transferred while the grantee is still alive. Therefore, ownership has already been transferred by the deed before the grantee’s Estate Plan goes into effect.
Does a Quitclaim Deed Expire?
A quitclaim deed does not expire because it permanently transfers ownership from one party to another. That being said, the new deed must be filed with the county clerk’s office to record the official transfer.
If the new deed is not recorded, it can create legal and financial challenges.
There is not a set deadline to file the new deed, though it is typically recommended to do so as soon as possible following the transfer. Without an official public record, there may be difficulties transferring the mortgage. There can also be difficulties if another family member makes a claim to the property -- which could only be settled by looking at the official deed on file.
Does a Quitclaim Deed Need to be Notarized?
A quitclaim deed does need to be notarized before it can be filed with the county clerk. Depending on the state, a witness signature may also be required.
Is a Quitclaim Deed Considered an Inheritance?
A quitclaim deed is not legally considered an inheritance. Instead, the property transfer is viewed as a gift in terms of the law. This is because the property owner signs the deed while they are still alive, rather than transferring ownership through a Last Will and Testament.
There are some cases where a person who owns property via a quitclaim deed may pass away and leave the property to an heir. In these cases, the property would technically be an inheritance. For legal purposes, the initial quitclaim deed would not be significant unless another ownership claim arose on the property.
What are the Tax Implications of Quitclaim Deeds?
The tax implications of a quitclaim deed are best summarized by the federal gift tax rules "> federal gift tax rules . Because no money is changing hands at the time of transfer, the property is considered a gift from the grantor to the grantee. The gift tax implications would be the responsibility of the grantor, and the value of the home would impact their lifetime gift tax exemption.
During the tax year that the quitclaim deed is issued, the grantor would report the transfer on their tax forms. A property would almost certainly exceed the $15,000 gift tax limit per recipient, but there is a lifetime exemption of roughly $11.5 million to be aware of. Consult with your financial advisor and Estate Planning team so you can choose a tax-forward strategy when it comes to managing your finances.
There are also a few points to be aware of in terms of tax liens and property taxes when it comes to quitclaim deeds. If there are any liens or other taxes owed on the property, the grantor will be required to pay them before the title can officially be transferred. Once the quitclaim deed is successfully filed, property taxes would become the responsibility of the grantee moving forward.
Quitclaim Deeds & Estate Planning - Get Started Today
Quitclaim deeds can be a useful tool in Estate Planning for a number of reasons. Not only do these documents allow properties to avoid the probate process, but they can also be used to supplement the asset in a Trust. Quitclaim deeds can save families time and money when a property needs to transfer hands, as long as the necessary requirements are meant.
While quitclaim deeds are known for their speed and efficiency, they are still legal documents and certain regulations must be followed. Further, there can be various tax implications of transferring a property or land through a quitclaim deed. If you are curious whether a quitclaim deed "> quitclaim deed might be useful to you, reach out to our team today.
There are several ways to transfer property to a loved one, and a quitclaim deed is just one option available. This legal tool can be used to fund a Trust, transfer a property to a loved one, or to assist in settling a divorce. Always remember to follow your state’s requirements and reach out to our team with any questions.
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How to Transfer Real Estate Property
Last Updated: October 8, 2022 References
This article was co-authored by Clinton M. Sandvick, JD, PhD . Clinton M. Sandvick worked as a civil litigator in California for over 7 years. He received his JD from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013. There are 12 references cited in this article, which can be found at the bottom of the page. This article has been viewed 47,749 times.
You can transfer real estate by completing a deed. A deed is a legal document which describes the property being sold and must be signed by the sellers. To begin the transfer of real estate, the seller should find a blank deed form and get the legal description of property. Although you usually don’t need a lawyer to transfer real estate property, you should contact an experienced real estate lawyer if you have questions.
Drafting the Deed
- Warranty Deed. With this deed, the seller guarantees that he or she owns the property being transferred.  X Research source If the seller does not actually hold title, then the buyer can sue for compensation. A warranty deed provides the buyer with the most protection. You should use it if you don’t know the seller.  X Research source
- Quitclaim Deed. With a quitclaim deed, the seller transfers whatever interest in the property that they own. However, the seller does not promise that it actually owns the title to the property.  X Research source Because quitclaim deeds provide less protection, they are usually used to transfer property between family members or between close friends.
- Grant Deed. With a grant deed, the seller promises that the title hasn’t been transferred to someone else.  X Research source Grant deeds are not available in all states.
- If you don’t have a copy of the deed in your possession, you should go to the Recorder of Deeds office in your county and get a copy.
- The description of property will be listed under “Legal Description” or “Description.” The property will usually be written as metes and bounds, which usually begins with the following language: “Commencing for reference at the dividing line between the City of.…”  X Research source
- You can get the tax number from your property tax bill or by visiting the local tax assessor’s office.
- Your county town office. You can stop in and ask if they have a blank deed form available.
- Online. There are many deed forms online. You should look for a copy from a reputable source, such as a bar association of attorneys or from your county government.
- Books. There are books or compact discs of legal forms for sale at many retailers. They often have blank deed forms you can use.
- The form should read something like the following: “This deed, made on June 1, 2015 between Michael J. Smith (‘Grantor’) and Alice K. Jones and Adam Y. Jones (‘Grantees’).”
- Language to create a tenancy in common would read: “Grantor, for a valuable consideration, conveys to Grantees, Alice K. Jones and Adam Y. Jones, as tenants in common, the following described real estate, together with rents, profits, fixtures, and other appurtenant interests, in Dane County, State of Wisconsin (‘Property’):”
- Sample language: “…to Grantees, Alice K. Jones and Adam Y. Jones, as joint owners with rights of survivorship, and not as tenants in common.…”  X Research source
- Sample language: “…to Grantees, Alice K. Jones and Adam Y. Jones, husband and wife, as tenants by the entirety, and not as tenants in common….”  X Research source
- If you use an attachment, clearly label the piece of paper “Attachment A.”
- Make sure that you describe the property accurately. Have someone else look at the description on the current deed and the description you have typed into the transfer deed. If the description is different, then the deed will probably be invalid.
Executing the Deed
- You can get a referral to a real estate lawyer by calling your local or state bar association and asking for a referral.
- You should be particularly careful when trying to transfer a deed to a couple as joint tenants. The law in this area is fairly complicated, and you could benefit from a lawyer’s advice.  X Research source If you don’t want to pay for the lawyer, then the buyers could pay for the lawyer to look over the deed.
- To find out if you need witnesses, you should read your state’s law. It should be published online. You can search by typing “your state” and “real estate transfer witnesses” into your favorite web engine.
- You can also stop by your county manager’s office and ask if they know whether you need your deed witnessed.
- If you get a printed form from the county, then check if there are signature lines for witnesses. If there are, then you should get witnesses.
- You can also find a notary by visiting the American Society of Notaries website and using the Locator function. Type in your address to find the nearest notary.  X Trustworthy Source American Society of Notaries Non-profit organization providing education, training, and supplies to notaries in the United States. Go to source
- If the property is owned by more than one person, then all owners must sign the deed. To make things easy, you can all go to the notary public at the same time.
- All people who are signing the deed need personal identification.
- You should expect to pay the notary a small fee for his or her services.
Recording the Deed
- County Recorder’s office
- Land Registry office
- Registrar of Titles
- Register of Deeds
- You will have to pay a fee in order to record the new deed.  X Research source You should call ahead and ask the clerk the amount and acceptable methods of payment.
- Each state has its own rules on who pays the transfer tax. In some states, such as Maine, the tax is divided equally between the grantor and the grantee.
- In others, like New York, the grantor pays the tax.  X Research source
- If you don’t receive a copy of the deed after eight weeks, you should call the Recorder’s office and ask.
You might also like.
- ↑ http://realestate.findlaw.com/selling-your-home/transferring-property.html
- ↑ https://www.ohiobar.org/forpublic/resources/lawyoucanuse/pages/lawyoucanuse-262.aspx
- ↑ http://realestate.findlaw.com/buying-a-home/what-are-property-deeds.html
- ↑ http://www.southportland.org/files/5913/9284/4487/08_-_Deed_into_City_for_Elderberry_Circle_01-24-14.pdf
- ↑ http://www.nolo.com/legal-encyclopedia/joint-property-concurrent-ownership-32229.html
- ↑ https://www.asnnotary.org/?form=locator
- ↑ http://www.sec.state.ma.us/rod/rodfees.htm
- ↑ http://www.ncsl.org/research/fiscal-policy/real-estate-transfer-taxes.aspx
- ↑ https://www.tax.ny.gov/bus/transfer/rptidx.htm
- ↑ https://www.realtor.com/advice/finance/transfer-real-estate-deed/
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Tips On Transferring Real Property Into A Living Trust
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Transfer Real Property Into A Living Trust In Arizona
Jenna’s estate planning attorney suggested she create a living trust. It seemed like the best way for her to pass her property to her heirs. She was confused, however, when her lawyer said she had to ‘transfer’ her real estate to her trust. Wasn’t it enough just to create the trust? No, Jenna needed to learn how to transfer her real property to her living trust.
Creating The Trust
It’s usually a revocable trust . That means if you change your mind, you can change your trust.
As grantor, you write and sign a trust document. You’ll name a trustee and at least one beneficiary. Sign the document before a notary public. There, you’re done, right?
Nope. The trust is empty, waiting to be filled.
Funding The Trust
When you transfer assets to a trust it’s called “funding” the trust. In this blog, we’ll talk about funding the trust with real property, although other types of property may become trust assets. One great thing about living trusts? You continue to control the property even after it’s transferred to the trust.
The trust document includes a list of property that will transfer to the trust. Personal property may not have to be itemized. Real property should be listed separately.
For each piece of real property, you’ll need to prepare, sign, and record a deed. You’re probably thinking, “Oh, no. More legal documents!” They’re necessary, though, and not that hard to complete.
How To Transfer Real Property In Arizona
You’ll need to choose which deed to use: quitclaim or warranty.
- Quitclaim deeds only sign over your legal interest. This kind of deed can be used even when another person or entity has an interest in the property.
- Warranty deeds transfer property that is owned free and clear.
Fill in the information at the top of the deed. That tells the county recorder where to send the recorded document. This usually will be you or your attorney.
Complete the names of the parties. Remember, you’re the grantor. The grantee is the living trust (The James and Martha Williams Living Trust, for example).
State the county in which the property is located. Then find the legal description of the property you want to transfer. This is important – the legal description must be correct. A typical legal description might read something like this:
All of Lots 5 and 6 of the Livingston Subdivision as recorded in Book 340 of Maps, Page 24-27 of the Maricopa County Records, City of Gilbert, Maricopa County, Arizona.
The description may contain something more technical like:
Thence South 24°07’20” West, 108.36 feet along said southwesterly right of way line to the point that lies on said southwesterly right of way line to the point of tangency.
Once that’s completed, you’ll need to sign the deed before a notary public.
The final step is critical: You must record the deed with the county recorder within sixty days of signing. Make sure you keep a copy if you mail it to the recorder. The original recorded deed will be returned to the person you named in the first step above.
Some Final Thoughts
The attorneys at the Keystone Law Firm assist clients every day with customized estate planning. To learn more about structuring your assets in a guaranteed estate plan, contact our office today at (480) 418-8448 . We offer services for clients throughout Arizona, including Chandler , Gilbert , Sun Lakes , Tempe , Phoenix , Mesa , Scottsdale , and Apache Junction .
Author: Francisco Sirvent - Keystone Law Firm
Author: Francisco Sirvent - Keystone Law Firm I graduated from the University of Arizona in 2001 with a B.S. in Biosystems Engineering, first in my class. I then entered the legal profession as a law clerk in 2002 and pursued a law degree at Arizona State University, completing the degree in 2006 as one of a handful of students who also obtained a Certificate in Law, Science and Technology. I led the Elder Law Pro Bono project and Christian Legal Society student chapters, and then interned at Arizona Technology Enterprises. I now run a law firm in Chandler Arizona dedicated to helping Arizonans with their Estate Planning, Probate and Family Law needs.
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Transferring Property Outside Probate
You may be able to transfer many or all of the assets in an estate without going through a formal probate proceeding. This will make the process shorter and simpler, leaving you with fewer pitfalls to avoid. The types of property that will not need to go through probate include assets for which the decedent named a beneficiary in a document other than a will. Also, assets that the decedent owned jointly with someone else may not go through probate if the type of ownership provides for the co-owner to automatically take over the decedent’s share.
The benefits of probate include formal deadlines for creditors to submit their claims against the estate and greater authority over contentious property division.
Many aging individuals put their property in a living trust so that they can transfer it to beneficiaries without going through probate. The successor trustee to the decedent will transfer the assets to the beneficiaries. This does not involve the executor unless they are also the successor trustee.
- Gifts of Property
An individual may reduce the number of assets that pass through probate by transferring some of their property to intended beneficiaries before they die. Assets transferred by gift avoid probate and may help the estate qualify for small estate procedures, but this may also raise issues concerning taxes and debt liability.
Property Held in Joint Tenancy or Tenancy by the Entirety
A surviving co-owner of any property held in joint tenancy will be able to take the decedent’s share of the property without putting the property through probate. They still need to fill out legal documents to establish their ownership of the asset, but this reduces the burden on the executor. In the event that the property was held in a community property state, a different procedure may apply for transferring the property to the surviving spouse, which may be even simpler.
Many states allow married couples or people in registered civil unions or domestic partnerships to own assets in tenancy by the entirety. This can be transferred similarly to property owned in joint tenancy, using a sworn statement by the surviving spouse.
Any property owned by the decedent with a surviving spouse as community property with right of survivorship goes to the surviving spouse by law. However, this option is not available in most states. Other community property states allow a spouse to designate some or all of their property as community property under a community property agreement. Even if there is no community property agreement, and the property is not explicitly held as community property with right of survivorship, the surviving spouse still may be able to gain access to it without probate.
A car inherited through a transfer-on-death provision still needs to be reregistered to the new owner.
Less than half of the states allow a car owner to register the vehicle on a transfer-on-death form. You can check the car’s registration to see if there is a TOD beneficiary. Otherwise, you can contact the motor vehicle agency in the decedent’s state to see if there may be another efficient alternative to probate to transfer the vehicle. Some states offer streamlined ways to transfer a vehicle to a surviving spouse or to transfer a vehicle that has little value.
Income and Securities
A surviving spouse usually can receive any remaining income or wages that had not yet been paid to the decedent. Otherwise, the decedent’s children can receive this money. If the decedent registered stocks, bonds, or mutual funds on a transfer-on-death form, those can pass to the beneficiary automatically. If the decedent co-owned savings bonds with someone else, the other owner can receive them without probate. Or, if they named a payable-on-death beneficiary, that person can receive the bonds.
A beneficiary of a payable-on-death bank account should be able to claim the money in the account without going through probate. They probably will not even need the assistance of the executor. A Totten trust or revocable trust account will follow the same process as a payable-on-death account and will not involve the executor directly.
Life Insurance, Retirement and Health Savings Accounts, and Pension Plans
Unless the decedent named their own estate as the designated beneficiary of a life insurance policy, its proceeds will go to the beneficiary named on the policy without the need for probate. There is an exception if all of the primary and alternate beneficiaries on the policy have died, but this is uncommon.
Similarly, beneficiaries of traditional and Roth IRAs, 401(k)s, and other retirement accounts can receive funds from those accounts directly, unless the decedent named their estate as the beneficiary. A health savings account attached to an employee’s health plan may contain funds that were invested before the employee’s death. These funds can go to beneficiaries directly. Pension plan distributions are another example of an asset that usually has a named beneficiary and can avoid probate.
Some state laws provide that divorce severs the ex-spouse’s right to a payable-on-death account, but some do not.
Special Issues Involving the Transfer of Real Estate
Under state law, a decedent’s primary residence may be classified as their “homestead.” This may mean that it is automatically transferred to their surviving spouse or children without probate, even if a will provides otherwise. Homestead property also may be protected from creditors.
About half of the states permit a property owner to transfer real estate in a transfer-on-death deed. The decedent must have recorded this deed before their death in the county where the property is located. The beneficiary can take title to the property without assistance from the executor.
Last reviewed November 2022
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To transfer a property into a trust, you will need a new deed with the name of the trust. Here's what you need to do. Menu burger Close thin Facebook Twitter Google plus Linked in Reddit Email arrow-right-sm arrow-right Loading Home Buying Calculators How Much House Can I Afford? Mortgage Calculator Rent vs Buy Closing Costs Calculator
The process of transferring real estate into a trust is fairly straightforward and consists of creating a new deed that changes ownership of the property to the trustee and name of the trust. You can also fund the trust with other assets, like cars and boats, in the same manner. Key takeaways
How to Transfer Property into a Trust In California, in order to transfer property into a trust you must change title of the asset from the grantor's name to the trustee's name. Trust Transfer Deed The type of deed required for this transfer is the trust transfer deed, which must be recorded with the county recorder's office.
The main benefit of putting your house in a trust is to bypass probate when you pass away. All your other assets, regardless of whether you have a will, will go through the probate process. Probate in real estate is the judicial process that your property goes through when you die.
In California, real property is assigned to a trust using a grant deed. A grant deed is a notarized form that states the owners of the property give the property to the trust. The owner is the ...
How to Transfer Assets Into a Living Trust Download Article parts 1 Assessing Your Assets Before Transferring to the Living Trust 2 Transferring Your Assets to Your Living Trust 3 Ensuring Orderly Dispersal of the Assets of Your Living Trust Other Sections Tips and Warnings Related Articles References Article Summary
How to Transfer Property Out of a Trust After Death - SmartAsset After the trust owner dies, the beneficiary can transfer property out of the trust by using a Trustee's Deed transferring ownership of the property. Menu burger Close thin Facebook Twitter Google plus Linked in Reddit Email arrow-right-sm arrow-right Loading Home Buying Calculators
Transferring assets via a trust is a private process. Probate can also drag out in certain cases, potentially costing a significant amount of money and lasting for months or even years. Trust assetsare only passed on according to the instructions in the trust document, so you can help your heirs avoid a long and costly probate.
While property transfers can be useful to accomplish a particular goal, not all taxpayers consider the tax consequences. There are other non-tax related issues to consider before attempting the property transfer by deed, will, or trust. Thus, here are common property transfer scenarios between family members and the respective tax implications:
Since your house has a title, you need to change the title to show that the property is now owned by the trust. To do this you need to prepare and sign a new deed to transfer ownership to you as trustee of the trust. Besides Putting A House Into A Trust, Are There Other Assets I Should Consider Putting Into A Trust?
Transferring property out of a trust can be simple or nearly impossible, depending on which kind of trust you formed. How Revocable Trusts Work Typically, you act as the trustee if you form a revocable trust. You retain control of the property you place into it. You can sell it or move it back out of the trust as you see fit.
Trustee Signatures. Trustees are the parties empowered with the authority to transfer ownership of trust assets. A trust may have one trustee or co-trustees, which is common with married couples. A trust's conditions may require co-trustees to agree to asset transfers, or they may allow co-trustees to act independently on behalf of the trust.
How to Transfer Real Estate Into a Trust First, you'll need to prepare and sign a new deed for the property. You'll usually need a grant form or quit claim form to transfer the deed. The forms vary by state and there are some nuances to the process.
To transfer ownership, you will need to obtain a title change form from your DMV and complete it, naming the trustee (as trustee of your trust) as new owner. Sales tax should not apply to the transfer and if the clerk tries to apply it, you will need to speak to a supervisor.
"The transfer is nontaxable." From a federal income tax perspective, the transfer does not need to be reported (since there is obviously no consideration being paid) and the trust will take a carryover basis in the property (accumulated depreciation included).
Once property has been transferred to a trust, the trust itself becomes the rightful owner of the assets. In an irrevocable trust, the assets can no longer be controlled or claimed by the...
It can be difficult to figure out whether you can use a simplified informal process to transfer property. In addition to assets that already have a designated beneficiary (like a life insurance or a bank account), estates with a value of $166,250 or less may qualify for a non-formal probate case. Also, if you were married to, or in a registered ...
The man created a second, irrevocable trust in 2009, which listed the same property on the schedule of trust assets. The man did not, however, sign a deed transferring the property from the 1985 trust to the 2009 trust. After the man's death, litigation ensued among the man's relatives over which trust actually owned the property.
Authorize transfer of a trust or trust property to or from another state or country. Direct transfer of a testamentary trust from one county to another. Approve removal of a testamentary trust from court supervision. Determine the reasonableness of payments for legal services. You can petition the Court for other reasons, too.
Transferring property out of a trust is the trustee's job. Generally, after the trustor passes away, the trustee notifies the trust's beneficiaries, enacts the trust's conditions and the...
The benefit of this is that it avoids probate administration. Because the trustee holds legal title to the trust property, there is no need to change title by probate administration upon the death of the settlor. This is a will trust and is generally preferred over the testamentary trust. Pay-On-Death (POD) and Transfer-On-Death (TOD) Contracts
Ownership interest in a house is called 'title,' and a deed is the legal vehicle used to transfer that title, or ownership, between parties. Regardless, the deed is the legal document used to prove title. The parties named on a deed can be individuals, groups of individuals, companies, and even estate planning instruments such as a Trust.
If a trust is part of your estate plan, your assets will need to be transferred into it at some point. Most of the time, this is a fairly simple process that requires nothing more than listing...
A quitclaim deed works by allowing one property owner to sign ownership over to another through a legal contract. The process is completed through the creation of a quitclaim deed form, which should include a description of the property, the date of the transfer, and the names of the individuals exchanging the title.
transferring property. The Documentary Transfer Tax is imposed on all instruments when the purchase price or value . of interest conveyed, less the value of any liens or encumbrances, exceeds $100. ... If the deed transfers the property into a living trust "This conveyance transfers an interest into a Living Trust. R&T 11930" OR "Grantee ...
You can transfer real estate by completing a deed. A deed is a legal document which describes the property being sold and must be signed by the sellers. To begin the transfer of real estate, the seller should find a blank deed form and get the legal description of property. Although you usually don't need a lawyer to transfer real estate ...
The trust document includes a list of property that will transfer to the trust. Personal property may not have to be itemized. Real property should be listed separately. For each piece of real property, you'll need to prepare, sign, and record a deed. You're probably thinking, "Oh, no. More legal documents!"
Trust Property Many aging individuals put their property in a living trust so that they can transfer it to beneficiaries without going through probate. The successor trustee to the decedent will transfer the assets to the beneficiaries. ... About half of the states permit a property owner to transfer real estate in a transfer-on-death deed. The ...