May 6

Real Estate in Trust

Cortes Law Firm Oklahoma City Estate Planning Attorney

How to transfer a real estate in your trust

Do you have a trust? Is your home in trust? Do you have a second home? Do you have a rental property? Do you have multiple rental properties? Are you a house flipper? Did you just create a new revocable living trust center estate plan? If you have a revocable trust, then it must be properly funded.

And that means anything that has a title showing ownership must be updated to show it is owned by the Trust. Your Trust. If you have a trust, then make certain all of your assets are in the name of your trust. That's called trust funding. The biggest asset most people have is well, their home. How do you transfer real estate, your home into trust?

If you go to an estate planning attorney and they prepare a revocable trust centered estate plan for you or you already have a trust, you can do it in one of two ways. The first is quick and pretty straightforward. It's a quitclaim deed. You've probably heard about this throughout your entire life. A quick claim deed from your personal name to the name of your revocable living trust so that the property is transferred into the name of your trust, where titling it in your trust.

For example, the current deed to the house of a married couple probably says something like this Jimmy Smith and Sally Smith as joint tenants with right of survivorship. When you transfer it to your trust, the quitclaim deed will state something similar to this. It'll say Jimmy Smith and Sally Smith transfer and convey to Jimmy Smith and Sally Smith trustees of the Jimmy Smith and Sally Smith Revocable Living Trust.

That's it. Now, the quitclaim deed will have other important language that is relevant to the state where you live in, but that is basically it. If you have the revocable trust done by an attorney, they will most likely do this for you as part of their revocable living trust package. We don't like our clients leaving our office without first putting their real estate into their trust.

The second way to transfer real estate is to have a tile company execute a warranty deed for you. Now we have seen people do this if they want to make certain that they have absolutely clean title. The reason for this is that the client themselves might have recently purchased the real estate by a quick claim deed, or maybe they bought it at an auction.

Now they're working on their estate plan, their retirement plan, and they want to make certain that there is clean title for their heirs. In other words, they want to clean up the title now and get rid of any issues so that their kids don't have to worry about it later on, or even their spouse in that case, they will actually go to a title company and have them do their complete package of title searches.

The title company will then issue a warranty and transfer the property from the person's personal name to the name of their trust. It can be done in either one of these two ways, either with a quick claim or with the warranty deed. It's really just up to you. We just do it with a quitclaim, and it's a pretty easy process.

As you can see, we prepare the deed for them. They sign it in front of our notary when they sign all their other estate planning documents. Then we take it down to the county clerk's office and file that claim deed with a memorandum of transfer certificate of trust and file that with the county clerk the property card. By doing that, you have transferred your home real estate from your personal name to the name of your trust is usually a painless process.

To put your real estate into your trust fund, in your trust with the real estate is extremely important. The consequence of not transferring your real estate is guess what? It needs to be probated. It's a real bummer when a person did everything correctly. They spent all that money on a trust. They funded everything else correctly except for that one piece of real estate.

Recently we had a brother and sister come in and they were trying to administer their father's estate, his trust estate. He was very diligent in putting all of his assets into his trust into that trust bucket. His attorney made certain that his home was in the name of the trust when he signed his trust fortune a year after he did this, the father sold that home and he bought a new, smaller home.

And just in his personal life, can you guess what happened? The house had to go through the probate process with real property if the person has already died. The only way to get it transferred from the deceased person's name to their heirs or into their trust is to go through the probate process. There are a few things that you need to be aware of when you put real estate into your trust.

Number one is your mortgage. A lot of time mortgages will have what is called a do on sale clause. That simply means that if you transfer the property in any way, then the mortgage is due and payable immediately. It triggers that clause. Now, the courts and legislatures have spoken on this issue. Transferring your home into your trust does not trigger the due on sale clause because a revocable trust is what's called a grant or trust.

It is essentially you in paper form, so to speak. Number two, you need to be concerned about homeowner's insurance if your home is insured in your name and then you transfer it to your trust. You need to make sure that your trust is named as also unsure under the policy. It's a simple process of calling your insurance agent, usually letting them know you have a trust, a revocable trust, and requesting that the trust be listed as also insured.

They can usually make this change over the phone. Contact your insurance agent so that it gets done right and do it at the time the property is transferred. Number three, your homestead exemption. If it's the home that you're actually living in, you need to make certain that your homestead exemption stays in place. This really depends on the county and the state where you are living in almost all instances.

As long as a person is transferring the property from their personal name to their personal trust with essentially the same name, then the homestead exemption stays in place. But I've heard stories or stories from other parts of the country, and they have to reapply for their homestead exemption, possibly at a higher rate. Always check with your taxing authority before you make those changes.

Very important. Bottom line on all of this trust fund, make certain that your property is titled correctly so that your estate plan, your retirement plan works correctly when it needs to remember that if an asset is not properly titled in the name of your trust, then it will have to go through the lengthy and expensive probate process. If you're still alive, then it's probably a guardianship process.

It's extremely important not only to avoid probate, but also to make certain that your heirs, the ones that you want to get your real property, actually receive it under the terms of your local living trust estate plan.


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