How To Sell A House That Is In A Trust
A trust represents a legal arrangement that will allow you to give property, cash, or investments to someone who will look after it for another person. For instance, you may want to set aside some savings for your children inside a trust. You will need a Trustee to provide your children with income or give them specific assets without dealing with probates.
In this example, the Trustee is the person who will fulfill the conditions defined within the trust and will serve the trust’s interests. The beneficiaries of the trust are those who will benefit from the trust assets. If you’re unsure of how a trust works and would like to know more, this blog post will explain how to sell a house that is in a trust.
Why Place a House on a Trust?
It’s quite common for homes and properties to be inside trusts. For many, placing their property inside a trust can be an advantage since it allows them to handle it much like a business. For example, if the homeowner should pass away, placing the home under a trust will allow them to avoid the management delay of probate.
While selling a house inside a trust isn’t straightforward under Alabama, Missouri, Oklahoma or Tennessee law, it can help you understand how control of the trust property works between the trustee and the beneficiary. Furthermore, it also teaches you how to sell a home inside a trust for both the beneficiaries or for the benefit of the trust assets as a whole. Below are further reasons why someone might want to put their property in a trust.
Advantages to Selling Properties in a Trust
There are various benefits to selling a property while it is in a trust — here are just a few:
- The Freedom to Sell – If you’re the trustee to a trust that includes residential property, you can sell it to the benefit of the trust. This includes a collection of residential investment properties or just one house. Before making the sale, be sure to check the intended gifts, terms of the trust, and consider whether to sell the trust assets as a whole or not.
- Selling as a Beneficiary – The beneficiary of a trust will rarely be able to fully control their trust assets since trusts are designed to separate the roles between trustees and beneficiaries. This is done to protect the assets through a neutral party to prevent the beneficiaries from burdening with trust management. This is especially true for trusts intended for minors.
Although, if you’re the beneficiary and receive a home as a gift, then you may choose to sell that property from the trust assets.
Trustees have an Obligation to the Trust
While trustees have a level of freedom with trust assets, it is restricted within their obligation to the trust and the trust beneficiaries. Trustees will often be tasked with maintaining the assets of the trust while growing the trust’s value as well. Moreover, when a house is inside a trust, the trustee will be the first person to sell it.
A trustee will also have the choice of selling a house inside the trust, provided that it’s not disadvantageous to the trust or a specific gift to a beneficiary.
Gifting a House from a Trust
A house inside trust assets will usually serve as a value which will then be provided to the beneficiary in a structured way. However, you may also get the house as a specific gift from the trust or its originating documents.
If a home is provided as a gift, the trustee will need to transfer the title so the beneficiary can become the legal owner of the house. Even if the house was still inside the trust, a beneficiary can still arrange to sell the property.
When to Sell a Home Within a Trust
If you’re wondering when you can and when you should sell a home under a trust, then you should know that it depends on a few circumstances. It’s good to know what will work best for the trust if you’re a trustee, or what works for you if you’re a beneficiary.
If it Will Benefit the Trust
A trustee can sell property under trust if doing so will benefit the overall assets of the trust. An example would be if the home’s value increased, where its sale will also increase the overall value of the trusts’ assets.
If it Will Pay Off Debts in the Trust
Unfortunately, trusts can also accumulate debt as an asset-holder; when this happens, selling a house under trust can benefit the trust and pay off its debts. Similarly, a home that was given as a specific gift can be sold if it is the only remaining asset available to pay for trust or estate debts.
If You Live Too Far Away
Sometimes, selling a house out of its trust is made in a practical and logical sense. A beneficiary or a trustee can sell a home under the right circumstances simply because the property is too far away from them. It only makes sense to sell the property if there is distance stopping them from maintaining the home to keep it profitable.
If You Want to Drop Unprofitable Property
We know that not every house was created equal, which is why some homes aren’t profitable to own. An old house will likely have high maintenance costs, while regional economic downturns can make homes unappealing. Both factors can make a house unprofitable, not just for the trust, but also for the beneficiary.
Trust Professionals with Your Trust
Properties within trusts are not particularly hard to deal with, but they’re not exactly straightforward either. A trust is owned through a legal agreement and will take extra steps before a trust-owned property can be transferred correctly. Be sure to look for a team of professionals who can help you when it comes to trust properties.
Luckily, you can choose from a wide range of professionals to help you with such a task — from real estate agents, estate lawyers, and financial managers. However, there’s no team better than 1-800-Sell-Now to handle your property trust problems.
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