In order to transfer or convey your conventional real estate into your trust, you will need a deed (We will discuss timeshares, leases, and oil and gas/mineral interests below). Your deed should be prepared by an attorney. Although there are many “do-it-yourself” documents available, you should avoid them in favor of a deed prepared by an attorney. Bluntly, don’t allow the title your most valuable and necessary asset be compromised by shoddy attention; the risk is just too great. Good attorneys will prepare an appropriate deed when preparing your trust. If you would like for our office to prepare your deed, fill out the form you can complete here, and forward it with a copy of the prior deed to your property.
The type of deed will depend upon the nature of the property and its value to you. You should consider a Warranty Deed for your home, or investment real estate for which you have paid for title insurance. Timeshares and cemetery lots may be conveyed by quit claim deed. A quit claim deed, however, may invalidate any title insurance that you have, so you should consider carefully whether it is appropriate. Of course, you are best advised to consult an attorney.
Once transferred, of course, you should find ownership in your trust to be the same as if you owned the trust in your name. After all, you typically control your trust. If you purchase new real estate, simply ask the title company or attorney to have the deed prepared in the name of your trust.
Admittedly, refinancing may not be as easy. Some lending institutions require you to conduct the business in your personal name and then transfer the property to your trust. While this can be annoying, it is a minor inconvenience that is easily satisfied.
Because your living trust is revocable, transferring real estate to your trust should not disturb your current mortgage in any way. Even if the mortgage contains a “due on sale or transfer” clause, re-titling the property in the name of your trust should not activate the clause. There should be no effect on your property taxes because the transfer does not cause your property to be reappraised. Also, having your home in your trust will have no effect on your being able to use the capital gains tax exemption when you sell it.
Homeowner’s Insurance
Make sure your homeowner, liability and title insurance are all changed to reflect your trustee as the new owner. This is typically accomplished by adding the trustee as an “additional named insured.” You can use the form that is available by clicking here to notify your insurer.
Timeshares
A timeshare is a form of ownership in a vacation residence that lasts for a specified period of time. When asked to identify their assets, clients will typically tend to overlook their interests in timeshares. How a timeshare is funded will depend on how the timeshare was created. The best starting point is to have your estate planning attorney review copies of all documentation in your possession regarding your timeshare. An examination of the documents should identify how the timeshare was created.
Timeshares are created in one of three different methods: license, lease, or deed:
Ownership by License: Ownership of a timeshare created by a license typically gives the owner the right to use a vacation unit at a specific resort during predetermined time during the year for a specified period of years. If the timeshare is created by a license, the license agreement needs to be examined by your estate planning attorney to determine whether there are any restrictions that would prevent it from being assigned. Some license agreements may require the consent of the company that owns the resort to provide written consent in advance of any assignments. Your estate planning attorney can contact the resort company to determine what procedures they require and, if necessary, obtain their written consent to the assignment. Your attorney can also create an Assignment to effectuate the transfer to trust. Due to the complexities of time shares, we strongly recommend that you consult an experienced estate planning attorney.
Ownership by Lease: Ownership of a timeshare may also be created by a lease. The primary method of funding this type of timeshare is through assignment of the lease, but may also be accomplished by executing a new lease. Your estate planning attorney should review the original lease for any restrictions that would prevent it from being assigned. Some lease agreements may require the consent of the company that owns the resort to provide written consent in advance of lease transfer to the trust. Once consent (if necessary) is obtained, your attorney will either prepare an assignment, or a new lease that transfers the interest into the name of the trust. If the timeshare is located out of state, your estate planning attorney can secure local counsel to prepare the lease and assure that it conforms with all state laws. The lease should be recorded in the county where the timeshare is located.
Ownership by Deed: Ownership of a timeshare may also be created by a deed. Your estate planning attorney should review the original deed for any restrictions that would prevent it from being assigned. Some deed agreements may require the consent of the company that owns the resort to provide written consent in advance of deed transfer to the trust. Once consent (if necessary) is obtained, a new deed then needs to be prepared that transfers the interest into the name of the trust. If the timeshare is located out of state, your estate planning attorney can secure local counsel to prepare the deed and assure that it conforms with all state laws. The deed should be recorded in the county where the timeshare is located.
Some timeshare lease agreements may require that a title search be performed prior to assigning the lease. It is not uncommon for a lease agreement of this type to require that the title search be conducted by a particular title company. This process can be expensive and may cost in excess of a thousand dollars. Some resort companies will waive the title search requirement, however, if the new lease is prepared by their legal counsel. Although the cost of their attorneys preparing the new lease may still be substantial, it will still result in substantial savings to the client as opposed to performing a full title search.
Mineral Interests
Oil and gas, coal, limestone, gravel interests (also referred to as “Mineral Interests”) are held in one of two different types of ownership. The manner in the interest is funded to your trust will depend on how the interest is owned. Mineral Interests can arise by deed or by lease. Thus, in order to fund Mineral Interest, a copy of the original deed or lease should be reviewed by an estate planning attorney.
As a general rule, if the oil or gas interest is owned by a deed (called Fee Ownership ), then the interest is funded by the use of a new deed. If the oil or gas interest is owned by a lease (called a “Lease Ownership”), then the interest is funded by the use of a legal assignment. These should be prepared by an experienced estate planning lawyer.
