Tips on Selling Property Held In Living Trust
You made the bold move to protect your assets with a living trust. You’ve moved your home and vacation home into the trust. You also settled a few investments of other types into it and some estate jewelry.
You thought you had everything just as you wanted it and then, an unexpected expense came up. Now, you want to sell your vacation home. You can easily liquidate it because its location provides a draw for people. Sure, the buyer’s market for it might exist, but whether or not you can sell it depends on the type of living trust you choose.
The Two Main Types of Living Trust
Irrevocable trust
Hopefully, when you set this trust up you realize the meaning of irrevocable. You can never change this type of living trust once you create it. What you put in the trust, stays in the trust. That’s the irrevocable part. You cannot transfer the property out of the trust, nor can you sell it. All of the items currently held in an irrevocable trust remain in it until you perish. At that time, the trust passes on to your beneficiaries. Your estate bypasses probate court and your family or another beneficiary, such as your adorable feline, inherits all that you had placed within the trust.
Revocable trust
You’re in luck if you set up a revocable trust! You can remove an asset from a revocable trust so long as the trust document says you can. Here’s why you need to work closely with your attorney when you initially create your trust and trust documents. Since you transfer ownership of all assets from your personal self to the trust when you create it, you no longer own the home you want to sell. You only get to sell the home if the documents say you can.
From this point, I’ll just focus on revocable trusts since you cannot sell anything placed within an irrevocable. There’s no point in talking about the impossible.
Steps to Sell Your Property in a Living Trust
Selling an asset that’s placed in a living trust takes a few added steps, but you can do it. Just follow the step-by-step instructions and work closely with your attorney.
Check your trust document. It must provide you with the authority to transfer the property. Does the document name you as the owner or the trustee of the property?
Check the original deed of the property for the owner of a record. Does it name the trust or you (as an individual)?
Call your lawyer who handled the trust. If that attorney isn’t available, you’ll need to find a new attorney and bring them up to speed on the trust. Provide the lawyer with a full copy of the trust document or apprise them of where it was filed so they can look it up for themselves.
Have the attorney prepare a deed for property transfer. The deed requires appropriate verbiage to ensure its validity. Only a properly worded deed remains enforceable.
Visit a notary public. You must sign the deed in front of the notary public. Instead of signing it as yourself, you sign it as the trust. This means that you sign it with your legal name used in the trust documents, a comma, and the verbiage “Trustee of the [name of trust].” For example, if I had a trust from which I wanted to sell a property, I’d sign the deed document as “Carlie Lawson, Trustee of the Carlie Lawson Family Trust.” Of course, if you weren’t named the trustee in the trust documents, you would not sign the deed solely. The deed must carry the signature of the trust’s trustee.
Register the deed with the county register of deeds or the county clerk.
Once you have transferred the property out of the trust, you can sell it just as you would if you had kept ownership in the first place. Although this provides an extra step since you aren’t listing it and selling it from within the trust, it can simplify matters. You examine the home to determine if it will need repairs before you sell it. If it does, you have professional repair personnel make the repairs.
List your ready-to-sell home with a realtor. This home sales professional can help you determine the proper asking price of the home or property.
A buyer snaps up your awesome home and you transfer the deed to them as a matter of the sale. You have the funds to take care of your unexpected expense.
Property Considerations
While establishing a trust protects your beneficiaries from going through probate, it does complicate your sales process. You’ll need to spend extra time ensuring that your property documents preserve the chain of title. Otherwise, you can cause problems for yourself in regard to the sale and obtaining a title insurance policy.
Perhaps you don’t want to sell, just refinance the property. Most mortgage lenders require you to remove the property from trust first. That means completing steps one through six above. Unless you intend to maintain the refinanced property outside of the trust, you’ll need to sign two deeds. First, you’ll complete deed paperwork to take the property out of the trust. As a second step, once you have refinanced the property, you sign a second deed to resubmit the property into the trust.
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Final Thoughts
You can sell a property from within most revocable trusts. You’ll need to contact your attorney to do so though. The process adds a few steps to the sales process but can be done. To learn more about managing your finances and building wealth, signup for a member key at Goalry. You’ll get free access to all of the Goalry brand of financial websites, including Budgetry, Loanry, Cashry, Taxry, Wealthry, and much more. You can learn step-by-step how to save money, reduce your bills, increase your income, and invest wisely. Register today!