DRAFTING REAL ESTATE SALES AGREEMENTS WHEN THE SELLER HAS A TRUST OR IS A PROBATE ESTATE
1. THE PARTIES TO A TRUST: TRUSTORS, TRUSTEES AND BENEFICIARIES. All revocable trusts must name the trust grantor (or trustor), who creates the trust. The trust must also name a trustee who manages the trust (often the same person.) The trust should name a beneficiary, and the trust should have an identifying date--the date it was originally signed.
2. WHEN THERE IS A TRUST, THE SELLER (OR BUYER) SHOULD NOT BE "THE JOHN AND MARY DOE TRUST", BUT SHOULD BE "JOHN DOE AND MARY DOE, TRUSTEES OF THE JOHN AND MARY DOE TRUST DATED " . The trust does not own assets. Rather, ownership of trust assets is always placed in the name of the trustee of the trust. The Trustee performs all trust business and signs papers, always putting the word trustee after their name. When the seller is a trustee, at closing the title company will issue the check payable to the trustee of the trust.
3. A TRUSTEE MUST HAVE AUTHORITY TO SELL TRUST ASSETS. Authority to sell trust assets must be stated in the trust, under a provision listing the trustee's powers. The title company will check the trust to see if there is authority for the trustee to sell the property.
4. A "CERTIFICATE OF TRUST" HELPS ESCROW COMPANIES. The closing will go quicker and smoother, if your sellers provide a certificate of trust to the title company.
5. BE ALERT WHEN THE SELLER IS THE TRUSTEE OF A DO-IT-YOURSELF TRUST Sometimes these trusts do not gibe proper authority to sell real estate, and sometimes the distribution provisions to final beneficiaries can make it difficult or even impossible to sell the real estate. Conversely, if your buyers are the trustees of a home made trust, dated ___. If there is a lender, obtain permission from the lender before taking deeded title in the trustee's names.
6. IF THE SELLER IS THE TRUSTEE OF A TRUST, THE LAST RECORDED DEED MUST SHOW THAT TITLE IS OWNED BY THE TRUSTEE OF THE SAME TRUST. Do not assume that the property is owned by the trustee of the trust, until you have examined the last recorded deed.
7. THE ABC'S OF SELLING TRUST REAL ESTATE WHEN THE ORIGINAL TRUST GRANTOR HAS DIED, AND A SUCCESSOR TRUSTEE IS TAKING OVER. When the original trust grantor/trustee has died, and a successor trustee wants to sell real estate: A. Make sure the grantor deeded the real estate into the trustee's name before the grantor died, with a proper legal description on the need; B. Make sure the trust document gives the trustee the authority to sell real estate in general; C. Make sure the trust document gives the trustee the authority to sell this particular real estate. If the real estate up for sale is specifically given to a particular person under the terms of the trust, then that person must approve of the sale, or the title company will not issue title insurance for the sale.
8. OREGON PROBATE 101 Probate is the court supervised method of paying the creditors of a person who dies owning assets in their name alone, without right of survivorship passing ownership to another person by way of the last recorded deed. A. There are two types of probate: First, there is a small estate probate procedure that may be used when all of the real estate of a deceased person totals less than $150,000 and all other assets total less than $50,000. For larger estates, there is a large estate probate procedure, which will require the assistance of an attorney. B. All wills go through probate when the will is the means of distributing assets of a deceased person. C. A person listed in a will called the "personal Representative" or "executor" has absolutely no authority to sell real estate, or do anything, until they obtain written authority from the probate court. D. If a person creates a trust and transfers their real estate by deed into the trustee's name before death, then the real estate avoids probate. The trust may be administered by the successor trustee privately after death, and the duty to put creditors is performed without court supervision. E. However, if the trust grantor did not deed their real estate into the trustee's name before death, then the "pour over will" may come into play. pour over pour over will transfers the trust assets into the trust, but only after a court supervised probate is completed. F. Title companies are very comfortable issuing title insurance when the seller is the personal representative in a large estate probate, who has obtained the proper Court papers, called "Letters Testamentary" prior to closing. However, the title company will scrutinize the terms of the will, to make sire the sale not is not specifically identified as a gift to one or more persons according to the will. G. If there is a mortgage on the property, and the heirs ( or survivors on the deed ) want to keep the property, they will probably not have to qualify for a new mortgage, so long as they keep making payments. H. Probate may be avoided by means of rights of survivorship, life estate deeds and trusts, However, each probate avoidance method may lead to serious negative consequences, depending on the family and the circumstances.
9. SMALL ESTATES. In Oregon, if the value of all real property owned by a deceased person totals less than $150,000, and all other assets total less than $50,000, then a quick small estate probate may be used, after waiting 30 days from the date of death. The personal Representative listed in the will, or an heir may apply to the court, and is called "the affiant". Title companies often apply the following rules when the seller is the affiant of a small estate probate: A. The title company may require the involvement of any attorney, at their discretion. B. All of the heirs must sign the deed, in addition to the affiant, especially if the deceased died within 4 months. If there are children and stepchildren involved in the estate, they may require all to sign. However, if more than 4 months have elapsed since the date of death, the title company may waive the requirement that all heirs sign the deed. C. If the person who died has just one or two heirs, and more than 4 months have passed, with little possibility of creditors claiming the estate, the title company may be willing to prepare an "affidavit of heirship and indemnity" document. If the title company agrees to this arrangement, the sale may be completed without the assistance of an attorney.
10. WHAT HAPPENS WHEN A PERSON DIES WITHOUT A WILL, AND OWNS REAL ESTATE IN THEIR NAME? Oregon has an assets distribution plan for every person who dies without a will, This plan, called intestacy, functions as a will for every person who does not have a will in Oregon, The persons who receive assets under intestacy are called "heirs". For example, if a person dies without a will, and has a surviving spouse, and he or she has either no children, or children only with her current spouse, then the intestacy plan gives everything to her spouse. If the decedent has children from more than one spouse, all the decedent's children share half the estate, and the decedent's current spouse takes the other half. All intestacy will distributions require a small estate or large estate probate procedure.
All of this information has come from the courtesy of Rik Huhtanen, Attorney. If you require further information or legal advice please contact him by visting his website at http://www.absolutetrustwillsandprobate.com
