A “Title Held in Trust” is legal ownership document showing a property is held for the benefit, use, income and enjoyment of another party - the beneficiary - who is often a child.
For example, if a person leaves an investment property to a child under the age of 18, the child would be considered too young to manage the property him or herself. In that instance, the parent might give the title to an appointed trustee to “hold the title in trust.”
The trustee would handle all details of the property’s management, including collecting any income due, and pass the proceeds on to the child. Often the arrangement is set up so the trustee earns a percentage of the property’s income. When the child comes of age, (which varies state to state), the title passes on to the child.
Transferring a Title to a Trust
Trust law is one of the most complex arenas of real estate law, but to put it simply, the person who sets up the trust transfers (conveys) his or her property from a personal estate to the trustee (or “trustor”) allowing the “grantor” to transfer that property from their own personal estate. This not only protects the property from creditors, but also from pesky would-be
To transfer the title to real estate you own into your trust, you must contact an attorney in the state and county where the property is located to have a new deed drawn up. You will change the name on the deed from yours to whomever you are naming trustee.
(If the property is part of a homeowner’s association or a condominium, you’ll need to get permission before any new deed may be recorded. If the property is subject to a mortgage and not your primary or secondary residence, you will also need permission from your lender before recording the new deed.)
Documents and Fees
You may have other documents that will need preparation and your signature besides the deed. These may include a Memorandum or Certificate of Trust and state, county and/or local tax forms. The attorney will arrange to get your signature on all the forms necessary to retitle your property.
When everything as been signed and all the permissions obtained, the new deed will need to be recorded into the public record of the county where the property is located. After recording, the original deed will be returned to you.
Costs and fees for such recording of a new deed vary state to state. Some states exempt transfers of real estate into trusts from any fee and others charge a nominal amount. Others consider the transaction a sale and assess full taxes. Again, your attorney will be able to advise you.
For more information on Title Held in Trust, visit www.alta.org.