Selling property from a trust

People are often apprehensive about putting their home or other property in a trust. It is a mystery to them. They ask, “Since the property is no longer in my name, how do I sell it? What happens to the money paid by the buyer? Who is the money paid to?”

The answer is simpler than you might imagine. The process is very similar selling it yourself. Typically the person who creates the trust also becomes the trustee. A trustee is someone who manages and runs a trust. So if your home is in a trust called “John Smith, Trustee, of the John Smith Living Trust” then the sale will progress in a very similar fashion to individual ownership.

John Smith will list the property with a broker. He will sign the contract. At the closing, he will sign the deed conveying the property to the purchaser. The only difference is, he signs in his capacity as trustee.

Who does the buyer write his check to? He writes the check to the seller. The seller is “John Smith, Trustee, of the John Smith Living Trust.” The check is deposited to an account held in the name of the trust.

If John Smith dies then the named successor trustee lists and sells the property. This is how trusts avoid probate. The house was trust property when Mr. Smith was alive and it remains trust property after he dies. There is no need for a court to transfer it. A new “manager” is in charge, the successor trustee. The successor trustee will distribute the home, or the proceeds from the sale of the home, in accordance with the terms of the trust to the named beneficiaries.

 

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