Trust Property Sales

The very first thing we do when selling a home in a Trust is order a Preliminary Title Report. We then speak with our Escrow Officer, the attorney and a copy of the Trust and determine if there are any Title issues that must be dealt with before the Deed can transfer.

Often some action needs to be taken to ensure the Trust actually has marketable title to the property. Our escrow officer, working with the Title Attorney, lets us know what needs to be done in advance, thus avoiding costly delays. Issues we routinely run across (and fix): Liens paid off, but not reconveyed, Property Taxes in arrears, claims to the property made by other related (and non-related) parties.

The value of the property at the time of the death of the owner is important because the IRS grants a “Stepped Up Basis” to the property. This means that the basis, as it relates to the Capital Gain Tax on the property, is moved up to the value of the property when the owner passes. This greatly reduces the chance the heirs will have to pay Capital Gain tax after the sale.

The value is typically established by a licensed Appraiser, usually within 30 days of death. If that has not been done, or if it has been years since the date of death we provide a referral to a licensed Appraiser with extensive experience in Values at Time of Death.

Of course, as with all tax matters, consult a Tax Professional before making any decisions.

Trust sales are typically exempt from some of the California Disclosure Requirements when selling Real Property (although recent law changes have increased the disclosures required).

The main exemptions are extensive seller questionnaires and the otherwise legally mandated Transfer Disclosure Statement. Replacing those is a 1-page document titled: Exempt Seller Disclosure. This does not eliminate or change the requirement that the seller (Successor Trustee) disclose any known material facts that may affect the property.

This reduced requirement reflects the fact that in the vast majority of Trust Sales by (Successor) Trustees, the Trustee has not lived in the property (or has not for several years).

The Successor Trustee will be signing all documents on behalf of the Trust. This includes the Residential Listing Agreement the CAR Residential Purchase Agreement and Escrow Instructions. On both of these documents, there is a specific disclosure regarding the Entity Seller (Signing on behalf of a Trust, Estate, LLC, partnership, etc...). The Full Name of the Trust (or Probate, including Case #) is added and the person signing on behalf of the Entity is listed along with their Title.

This section discloses to all parties that the signor is signing on behalf of the Trust or Estate and has the legal authority to do so.