Selling a Home Held in a Trust
Selling a home held in a trust in Texas involves several specific steps and legal considerations. Here’s an overview of the process:
1. Understand the Trust Structure
Type of Trust: Determine if the home is held in a revocable living trust, irrevocable trust, or another type. This affects the level of control and taxation.
Trust Terms: Review the trust document to ensure the trustee has the authority to sell the property and any conditions or limitations related to the sale.
2. Verify Trustee Authority
Trustee’s Role: The trustee acts as the legal owner and is responsible for managing the trust property.
Proof of Authority: Obtain a certified copy of the trust document and a trustee's certification or affidavit to prove the trustee's authority to third parties (e.g., buyers, title companies).
3. Prepare the Property for Sale
Ensure the property title reflects ownership by the trust. This typically reads as "John Smith, Trustee of the Smith Family Trust."
Address any liens or encumbrances on the property.
4. Hire Professionals
Real Estate Agent: Engage an agent experienced with trust sales to help market the home.
Attorney: A Texas-based estate or real estate attorney can ensure compliance with state laws and trust terms.
Tax Advisor: Consult an advisor about potential capital gains or other tax implications from the sale.
5. Market and Sell the Property
List the home on the market, disclose its status as trust-owned, and ensure all necessary trust-related disclosures are made to potential buyers.
Negotiate and accept an offer, with the trustee signing the purchase agreement.
6. Title and Escrow Process
Provide the title company with the trust documentation to verify ownership and trustee authority.
The trustee signs the deed transferring ownership to the buyer at closing.
7. Distribute or Retain Sale Proceeds
Distributions: If the trust terms require the proceeds to be distributed to beneficiaries, follow the instructions in the trust.
Retention: If the trust retains the proceeds, they must remain in the trust for management according to its terms.
8. Tax Reporting
Report the sale on the trust's tax return. The specifics depend on whether the trust is revocable (and thus taxed to the grantor) or irrevocable.
Key Considerations in Texas
Community Property: If the home was part of a marital estate, ensure community property laws are respected.
Homestead Laws: Texas homestead protections might require additional steps if the home was the primary residence of the trust’s grantor.
Selling a home through a trust can streamline the process compared to a probate sale, but working with knowledgeable professionals is essential to ensure compliance with legal and tax requirements.
For More Information About Selling a Home Held in a Trust contact Allen Deaver of Asset Realty today.
