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Title Insurance Requirements for Insuring Trusts
In today's world of busy probate courts and exorbitant death taxes, the living
trust has become a common manner of holding title to real property. The following may help
you understand a few of the requirements of the title insurance industry if title to property
is conveyed to the trustee of a living trust.
What is a trust?
An agreement between a trustor and trustee
for the trustee to hold title to and administer designated assets of the trustor for the
use and benefit of one or more beneficiaries.
Can a trust itself acquire and convey interests in real property?
No.
The trust is an arrangement between a trustee and the trustor. Only the trustee, on behalf
of the trust, may own and convey any interest in real property. The trustee may only exercise
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?
First, a certification that the Trust
and amendments (if any) are complete, the names of the present trustees of the trust,
and a statement that the trustees are empowered by the trust to complete the proposed transaction.
Second, at the discretion of the title company, a full copy of the trust and
any amendments.
My trust contains certain amounts of money to be given to various
charities which is none of your business. Can I omit these pages?
Because many
different provisions may be on the same page, the answer must be no -- but if the title
company requires a copy of the trust, it may accept a copy with those amounts blacked
out.
If there is more than one trustee, can just one sign?
Maybe.
The trust must specifically provide 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 do so, or the trust
provisions prohibit the trustor from appointing a new trustee, the court may do so.
How does a notary acknowledge the signature of the trustee?
Title
is vested in the trustee. Hence, if the trustee is an individual or a corporation, then the
new general form of acknowledgment will be prepared to reflect the intrinsic nature of the
trustee.
How would the deed to the trustee ordinarily be worded to transfer title to the trustee?
"John Doe and Mary Doe, as trustees of the Doe family trust, under declaration
of trust dated January 1,1992."
Are there any limitations on what a trustee may do?
Yes,
the trustee is limited principally and most importantly 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.
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