The Basics of Title Insurance Requirements for Living Trusts
With today’s busy court system and increasing desire for privacy, living trusts have become a common manner of holding title. Below, you’ll find information on a few of the requirements of the title insurance industry concerning living trusts.
What is a trust?
A trust is a legal agreement between a trustor and trustee for the trustee to hold title to and administer the trustor’s designated assets for the use and benefit of the beneficiaries.
Can a trust itself acquire and convey interests in real property?
No. The living trust is an arrangement between a trustee and a trustor; only the trustee, on behalf of the trust, may own and convey any interest in real property. The trustee may exercise only the powers granted in the trust.
What will the title company require if a trustee holds the title to the property which is part of the trust?
Title companies require a certification of trust with the following information: 1) the date of execution of the trust instrument, 2) the identity of the trustor and trustee, 3)enumeration of the powers of the trustee, 4) identity of the person with the power to revoke the trust, if any, 5) signature authority of the trustees, 6) the manner in which the title to the trust assets should be taken, 7) a legal description of any interest in the property held by the trust, and 8) a statement that the trust has not been revoked, modified, or amended in any manner which would cause the certification to be incorrect and that the certification is being signed by all currently acting trustees.
If there is more than one trustee, can just one join?
Only if the trust specifically provides for less than all to sign.
Can the trustee give someone a power-of-attorney?
Only if the trust specifically provides for the appointment of an attorney-in-fact.
What will the title company require if all the trustees have died or are unwilling to act?
If the trustor is not able to appoint a new trustee, or the trust provisions prohibit the trustor from doing so, the court may appoint a new trustee.
Who can be trustee?
A trustee can be any individual who is not under a legal disability, or a corporation that has qualified to do a trust business in the state.
How does a notary acknowledge the signature of the trustee?
The title is vested in the trustee. Therefore, if the trustee is an individual or a corporation, then the new general form of acknowledgment will be prepared to reflect the nature of the trustee.
How would the deed to the trustee ordinarily be worded to transfer title to the trustee?
“Sam Wilson and Martha Wilson, as trustees of the Wilson family trust, under declaration of trust dated July 1, 1994.”
Are there any limitations on what a trustee may do?
Yes: the trustee is most importantly limited by the provisions of the trust and, thus, may only act within the terms of the trust. The Probate Code contains general powers which, unless limited by the trust agreement, are sufficient for title insurers to rely on for sale, conveyance, and refinance purposes.
Have a good one and let me know if you need anything.