How to Sell a San Diego Property that is in a Trust

We often work with sellers who are the trustee for a trust, and they want to know a) what their legal obligations and options are and b) how they can sell the property in a trust with minimal hassle. It may sound intimidating or confusing in concept, but a trust sale is really very similar to a normal sale and can provide a lot of benefits to trustees and beneficiaries.

In order to feel confident as the trustee of your trust, here are some insights that may help you better understand the process.

What You Should Know About Putting a Home into a Trust:

What is a trust’s purpose? Most trusts are made because the creator would like to help his/her beneficiaries in specific ways that need to be outlined. So, when a trust is created, it specifies how and when the trust’s profits and assets (in this case, real estate) will be distributed to the beneficiaries. And it is up to the trustee to coordinate and manage the trust in alignment with the declaration of the creator. Usually real estate is put into a trust when the owner has passed away or is no longer able to manage the ownership of it. It’s also common for homeowners to put their homes in trusts instead of a will, which we will explain more below.

What is a revocable living trust and how is it different? If the trust is “revocable,” this basically means that the creator can change the terms at any time. A living trust is a trust that was established or created while the donor of the trust property is still alive. Many times, if someone creates a revocable trust, they appoint themselves as a trustee during their lifetime. If you have created a revocable trust and done this with your property, you can manage the real estate as a trustee just as you would if the title was still in your own name (making repairs, putting the property on market, negotiated the sale etc.). You can treat the property the same. Most elements of the sale will not change at all if you sell the property as a trustee rather than as yourself.

Benefits of a trust sale? Trusts are great in that they protect privacy. Rather than having individual names used in public documents regarding the sale of a property, the name of the trust is included. Selling a property that is in a trust can be of benefit when family tensions are uneasy as well because proceeds can go to beneficiaries in designated amounts, without conflict. While the trustee is still responsible for the details, the beneficiaries will receive what the owner wishes (win-win for everyone).

One of the most important benefits in creating a family trust, or a living trust, is that your estate’s assets can avoid a San Diego probate. Probate means a long legal process that can lock up the estate for years. Avoiding probate also means that you can avoid probate fees and court costs that stack up over that period of time. California probate fees, appraisals and filing fees can end up costing tens of thousands of dollars when all is said and done. At minimum, a probate will last 6 months, but 1-2 years is much more common.

How is a trust sale handled?

In general, a trust sale will be very similar to that of a traditional sale. The primary difference is that instead of the name of a seller, the name of the trust will be used in the transaction. The trustee will sign documents and provide typical disclosures. However, there are a few small special considerations to prepare for:

  • Obtain a copy of the trust or certification of trust.
  • Do a bit of preliminary research for your state – every state will require that a grantor (you, as the trustee) signs a deed assigning the property to the buyer, or grantee. Some states will want the buyer to sign the deed, as well as witnesses.
  • The trust documents must be passed along to the title company involved in the transaction. After looking at the trust, the title company will confirm whose signatures are required (some may also ask for a tax ID number for the trust of a death certificate if heirs are selling the house).
  • The trustee, or grantor, will sign the deed transferring ownership to the buyer (to confirm the sale). In some cases, the state law requires having the deed notarized so be sure to consult with your real estate agent, or your investor buyer.

If you are a trustee, then you can control the trust and manage its assets. Remember that with this responsibility, you need to consider what’s best for the assets in the trust and do what’s outlined for the beneficiaries included as well. Trusts can sometimes get complicated when the owner has passed and it is up to heirs to determine what is most productive. We often see beneficiaries wanting to become very involved, and it isn’t uncommon to have family members with strong opinions about the sale of the trust property. To avoid being liable for breach of trust and to feel confident about your choices for the trust, we always advise you speaking to a qualified investment professional.

Someone to Trust with Your Trust’s Assets

As we mentioned, we know how messy trust sales can potentially become. We know the ins and outs of trust sales in California, and we work with knowledgeable real estate law professionals who can ensure a smooth process with less hiccups. If you’re reading this article and thinking to yourself “I could really use some advice and guidance through this process,” rest easy knowing our team is trained to walk you through the process AND help you understand it. If you have a property in a trust that you’re considering selling, give us a call at any time to talk through your options and best courses of action.