The Family Trust and Real Estate
The Family Trust And Real Estate
A Family Trust, also known as a Family Living Trust or a Revocable Family Trust, is a legal entity created by a Trust Agreement to hold ownership to your personal and real property. Your attorney will create the necessary documents to establish the trust. A Trust is created for estate planning purposes.
Purpose Of A Family Living Trust
The purpose of a family trust is to hold your assets, including land, making it easier to pass those assets to your heirs upon your death. Using a Trust allows you to do this without a probate or other court involvement. You establish the successor trustees and beneficiaries of your trust and they automatically control and own the trust and its assets upon your death.
Any terms can be entered in the trust agreement. Provisions that decide how assets are divided and how heirs are taken care of are common.
Trustees and Successor Trustees
When you create a trust you decide on trustees and successor trustees. The trustees control the trust and have full power to make any decisions for the trust. For this reason the Trust creators usually designate themselves as the trustees.
Successor trustees are also designated and become the trustees upon the death or resignation of the original trustees. When they become the trustees they have the same power as the original trustees.
Trusts are normally revocable (can be canceled) while the original trustees are living, after their death the trust becomes irrevocable. The successor trustees control the trust but are required to act in accordance with the trust agreement, which controls how the assets are divided and disbursed.
The beneficiaries of a family trust do not control a trust but the trust is set up for their benefit. This could be the minor children of the original trustees. The Trust creators can also set up others or charities as the beneficiary of their trust.
Trustees, successor trustees, other people, charities, or your pet cat, can be beneficiaries of the Trust. You have the option to setup and control how and when your assets are disbursed and to who with a trust.
Family Trust Becomes The Land Owner
When you create a Family Trust you must transfer your real estate into the Trust. At that point the family trust becomes the owner of the property. As you control the trust you still control the property. The transfer is usually done with a quit claim deed from you and any other owners to the trust.
Transferring Land In And Out
As long as you control the trust you can transfer your land out of the trust at any time. Lenders often require property be removed from a trust before they will make a loan.
You create a Family Living Trust by a Trust Agreement prepared by your attorney. The Trust allows you to transfer your assets including land into the trust and decide who controls those assets and who receives them after your death.