In today’s world of busy probate courts and death taxes, the living trust has become a common manner of holding title to real property. The following may help you understand a few of the requirements of the title insurance industry if title to property is conveyed to the trustee of a living trust.
- Q: What is a trust?
- A: An agreement between a trustor and trustee for the trustee to hold title
to and administer designated assets of the trustor for the use and benefit
of one or more beneficiaries. - Q: Can a trust itself acquire and convey interests in real property?
- A: No. The trust is an arrangement between a trustee and the trustor. Only
the trustee, on behalf of the trust, may own and convey any interest in real
property. The trustee may only exercise the powers granted in the trust. - Q: What will the title company require if a trustee holds title
to the property which is a part of the trust? - A: First, a certification that the Trust and amendments (if any) are complete,
the names of the present trustee(s) of the trust, and a statement that the
trustees are empowered be the trust to complete the proposed transaction.
Second, at the discretion of the title company, a full copy of the trust and
any amendments. - Q: My trust contains certain amounts of money to be given to various
charities which is none of your business. Can I omit these pages? - A: Because many different provisions may be on the same page, the answer
must be no – but if the title company requires a copy of the trust, it may
accept a copy of the trust, it may accept a copy with these amounts blacked
out. - Q: If there is more than one trustee, can just one sign?
- A: Maybe. The trust must specifically provide for less than all to sign.
- Q: Can the trustee give someone a power-of-attorney?
- A: Only if the trust specifically provides for the appointment of an attorney-in-fact.
- Q: What will the title company require if the trustees have died
or are unwilling to act? - A: If the trustor is not able to do so, or the trust provisions prohibit
the trustor from appointing a new trustee, the court may do so. - Q: Who can be trustee?
- A: Any individual not under a legal disability or a corporation that has
qualified to do a trust business in the state of California. - Q: How does a notary acknowledge the signature of the trustee?
- A: Title is vested in the trustee. Hence, if the trustee is an individual
or a corporation, then the new general form of acknowledgment will be prepared
to reflect the intrinsic nature of the trustee. - Q: How would the deed to the trustee ordinarily be worded to transfer
title to the trustee? - A: “John Doe and Mary Doe, as trustees of the Doe family trust, under declaration
of trust dated January 1, 1992.” - Q: Are there any limitations on a what a trustee may do?
- A: Yes, the trustee is limited principally and most importantly by the provisions
of the trust and, thus, may only act within the terms of the trust. The probate
code contains general powers which, unless limited by the trust agreement,
are sufficient for title insurers to rely on for sale, conveyance and refinance
purposes.