Disclaimer: This post is from the point of view of one individual. It will not be definitive but will try to be comprehensive.
Let me start by saying that I am NOT a lawyer and that my understanding of trusts is based on observation and what I have read online. If you are interested in putting your assets into a trust, talk with your family lawyer. Which leads to the question, why bring up trusts?
In 2014 my parents put all of their assets into a Family Trust. As they stated things, they have worked hard for their assets and want them to go to their children. An inheritance can really be diminished in probate court and may not be divided according to the wishes of the individuals. However that is for a law site blog.
Here is how trusts and real estate interact. Let’s say that my parents need to move into a smaller home and want to list and sell their home. Since the property is part of their trust, they will need to supply a Memorandum or Affidavit of Trust showing that they are the trustees and therefore have the right to list the property. The best policy is to have one and present it at the time of listing.
However what happens if the agent doesn’t ask for the Memorandum and lists the property then you sign a contract? It’s simple. The title company will discover that the property is part of a trust and you will be required to supply them with a copy of the trust. In many ways, a trust is an additional way of safeguarding your property.
Of course, once you sell your current property you will need to decide if you want to add your new property into the original trust. If you want to continue to have your property in a trust, there are extra steps required at the time of closing to make that happen.
Let’s say that my parents have passed away. Then what? The designated trustee will have the responsibility of deciding what is to be done with the property and assets. Let’s say that the trust stipulates the property is to be sold upon my parent’s death. It then becomes the trustee’s responsibility to sell the property. The new trustee will definitely need to supply the agent with a Memorandum of Trust to verify that he or she can enter into an Exclusive Right to Sell Agreement.
The bottom line is, if you want to sell property involved in a trust you need to supply a Memorandum or Affidavit of Trust showing you are the designated trustee. So please, make it easy on your agent and just have the right paperwork when you call them to list. Thanks.