Estate planners often recommend "Living Trusts" as a viable option when contemplating the manner in which to hold title to real estate property. When a property is held in a Living Trust, title companies have certain requirements which need to be addressed in order to facilitate the transaction.

The following are answers to many commonly asked questions. If you have questions that are not answered below, your title company representative may be able to assist you; however, you may also wish to seek legal counsel.

Who are the parties to a Trust?

A typical trust is the Family Trust in which the Husband and Wife are the Trustees and their children, the Beneficiaries. Those who establish the trust and transfer their property into it are known as Trustors or Settlors. The settlors usually appoint themselves as Trustees and they are the primary beneficiaries during their lifetime. After they are deceased, their children and grandchildren usually become the primary beneficiaries if the trust is intended to continue, or the beneficiaries receive distributions directly from the trust if it is to close out.

What is a Living Trust?

Sometimes called an Inter-vivos Trust, the Living Trust is created during the lifetime of the Settlors (as opposed to being created by their Wills after death) and usually terminates after they die. The body of the Trust is then distributed to their beneficiaries.

Can a Trust hold title to Real Property?

No; the Trustee holds the property on behalf of the Trust.

Is a Trust the best way to hold my property?

Only your attorney or accountant can best answer this question for you. Some common reasons for holding property in a Trust are to minimize or postpone death taxes, to avoid a time-consuming probate and to shield property from attack by certain unsecured creditors.

What taxes can I avoid by putting my property in trust?

Married persons can usually exempt a significant part of their assets from taxation and may postpone taxes after the first one of them is deceased. You should check with your attorney or accountant before taking any action.

Can I homestead property which is held in a Trust?

Yes, if the property otherwise qualifies.

Can a Trustee borrow money against the property?

A Trustee can take any action permitted by the terms of the Trust and the typical Trust Agreement does give the Trustee the authority to borrow and encumber real property. However, not all lenders will lend on a property held in trust, so check with your lender first.

Can Someone else hold title for me "in trust?"

Some people who do not wish their names to show as titleholders make private arrangements with a third party Trustee. However, such an arrangement may be illegal and is always inadvisable because the Trustee of record is the only one who is empowered to borrow against the property. A Title Insurer cannot protect you from a Trustee who is not acting in accordance with your wishes despite the existence of a private agreement you may have with the Trustee.