Sale of Property in a Trust - The Process

Sale of Property in a Trust - The Process

  • The Crem Group
  • 02/12/24

Protecting your real property in a trust can be a smart way to both safeguard and manage your assets. A trust provides directives on what happens to the holdings within the trust, ensuring they are appropriately dispersed according to the grantor's wishes.

And while a trust can help avoid the probate process in court, selling a home placed in a trust is a complex and complicated process. A trust sale requires special documentation and procedures best directed by a real estate brokerage specializing in court-supervised transactions.

What is a trust?

In basic terms, a trust is a legal construct meant to hold assets on behalf of another person. It is a legal entity created by the settlor or grantor who transfers control of the assets to a trustee. The trustee manages the assets using the guidelines set forth by the grantor.

A trust is designed to ease the transfer of assets to a beneficiary and avoid the lengthy, complicated probate process. This legal agreement can be used for a variety of assets like vehicles, life insurance, savings accounts, and cryptocurrency. Many decide to place real property, like a home, in a trust to make the sale less complicated for their beneficiary.

Types of trusts

There are four different types of trusts. The trust’s type will dictate how its assets are managed and distributed once the grantor has passed away. Each type of trust has special considerations controlled by the agreement.

  • Revocable trust: The grantor can dissolve or change the trust at any point.

  • Irrevocable trust: The grantor cannot void the trust without approval from the beneficiary.

  • Living trust: A living trust is created by the grantor during their lifetime. It is most often revocable.

  • Testamentary trust: A testamentary trust becomes active only after the grantor has passed.

Considering revocable vs. irrevocable trusts

A revocable trust can be voided or altered by the grantor. This can include changing the beneficiaries or management terms. Even though this type of trust provides more flexibility, a revocable trust is liable for estate taxes. The assets within a revocable trust are not protected from creditors.

The grantor cannot alter or void the trust terms without approval from the beneficiaries in an irrevocable trust. While this type of trust allows for less control, its benefits are protected from creditors and are exempt from estate taxes. All trusts become irrevocable once the grantor or settlor has passed.

Why place your home in a trust?

A trust cannot be contested and bypasses the lengthy, complex probate process in court upon the grantor’s passing. Settling your home in a trust is a smart way to manage your assets and ensure all earnings are adequately dispersed.

Homes that go to probate often sell at a reduced price, meaning less profit for the beneficiary. If your home is in a trust, the sale process is handled by a professional trust and probate broker. An experienced broker will traverse all aspects of the sale, using their expertise to leverage a greater profit from the beneficiary.

Selling a property in a trust

When you wish to sell a home held in a trust, the process is similar to a traditional real estate sale — with added layers of complexities. The sale of a trust property occurs within the limitations and instructions of the agreement. Properties held in trust often take longer to sell, as more extensive documentation and organization are required.

The sale of real estate held in trust can occur in various ways. If the grantor is still living and wishes to sell the property, the process will depend on the trust’s type. The grantor of a revocable trust can sell the property, either claiming the funds or keeping it in the trust. If the trust is irrevocable and the grantor is still living, they will need to seek the approval of the beneficiary to proceed with the sale.

Selling with a trustee

In this process, the entire sale process is handled by the trustee. They will sell the property to a third-party buyer, and the funds will be returned to the trust. This can be a smart move if there are several benefactors, wherein the trustee can disperse the funds to beneficiaries as outlined in the trust.

To sell a home with a trustee:

  • Review all documentation to ensure the trustee has permission to sell the property.

  • Hire a reputable real estate broker with experience selling trust property.

  • Supply sufficient proof that the trust is valid. Documentation should include a Certificate of Trust signed by a trust attorney, the grantor's tax ID number, and the grantor's death certificate.

  • The contract can be closed once the trustee, beneficiary, and buyer agree on a sales price.

  • All earnings become part of the trust and can be held or distributed to the beneficiaries.

Selling without a trustee

In this process, the trustee transfers the title to the beneficiary with special allowances. The beneficiary becomes the property owner and can proceed with a real estate transaction.

To sell a home without a trustee:

  • Review all trust documentation to ensure the trustee can transfer the property title to the beneficiary.

  • Gain permission from the trustee to allow the transfer of the title.

  • Complete a deed form and file it with the local property office to complete the official transaction.

  • After the title transfer is complete, the beneficiary is now the property owner and can work with a broker specializing in trust sales.

Why you need an expert trust sales real estate team

Selling a trust property can be a complex process with detailed guidelines that adhere to legal protocol and work to maximize gains. By working with a probate expert, you’ll have professional help to ensure the process flows seamlessly.

The CREM Group
is a boutique real estate team specializing in complex court-supervised sales. With legal and real estate expertise, the group provides dedicated and professional services for trust, probate, and other court-overseen transactions. With over 50 years of combined experience, The CREM Group can manage your trust sale with professionalism, reliability, and invaluable knowledge.

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