Trust & Probate Sales

What to know? What is the difference?

When it comes to handling trust and probate sales, it is best to consult with an attorney who can bring you to full understanding on all details. A professional real estate agent like myself can also help navigate your purchase or sale in this market.

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Understanding Living Trusts

Estate planners often recommend “Living Trusts” as a viable option when contemplating the manner in which to hold title to real property. When a property is held in a Living Trust, title companies have particular requirements to facilitate the transaction. While not comprehensive, following are answers to many commonly asked questions. If you have questions that are not answered below, your title company representative may be able to assist you, however, one may wish to seek legal counsel.

Who are the Parties to a Trust?

A typical trust is the family trust in which the husband and wife are the trustees and, with their children, the beneficiaries. Those who establish the trust and transfer their property into it are known as trustors or settlors. The settlors usually appoint themselves as trustees and they are the primary beneficiaries during their lifetime. After their passing, their children and grandchildren usually become the primary beneficiaries if the trust is to survive, or the beneficiaries receive distributions directly from the trust if it is to close out.

What is a Living Trust?

Sometimes called an Inter-vivos Trust, the Living Trust is created during the lifetime of the settlors (as opposed to being created by their wills after death) and usually terminates after they die and the body of the trust is distributed to their beneficiaries.

Can a Trust Hold Title to Real Property?

No. The trustee holds the property on behalf of the trust.

Is a Trust the Best Way to Hold My Property?

Only your attorney or accountant can answer the question; some common reasons for holding property in a trust are to minimize or postpone death taxes, to avoid a time consuming probate, and to shield property from attack by certain unsecured creditors. In order to effectively use this metric, you’ll need to learn how to calculate the cap rate. The formula you’ll need to calculate the cap rate is simply net operating income (NOI) divided by the property’s current market value.

What Taxes Can I Avoid by Putting My Property in Trust?

Married persons can usually exempt a significant part of their assets from taxation and may postpone taxes after the first of them to die passes. You should check with your attorney or accountant before taking any action.

Can I Homestead Property Which is Held in a Trust?

Yes, if the property otherwise qualifies.

Can a Trustee Borrow Money Against the Property?

A trustee can take any action permitted by the terms of the trust, and the typical Trust Agreement does give the trustee the authority to borrow and encumber real property. However, not all lenders will lend on a property held in trust, so check with your lender first.

Can Someone Else Hold Title For Me “In Trust?”

Some people who do not wish their names to show as titleholders make private arrangements with a third party trustee; however, such an arrangement may be illegal, and is always inadvisable because the trustee of record is the only one who is empowered to convey, or borrow against, the property, and a title insurer cannot protect you from a trustee who is not acting in accordance with your wishes despite the existence of a private agreement you have with the trustee.

Title Consumer Series:

Understanding Probate

Everyone has a will or plan, whether created or by default. Even if you have not made out a will or a trust, you still have a plan – a plan dictated by the laws of the state where you reside upon your death. Making a will is not a way to avoid "probate", the court procedure that changes the legal ownership of your property after your death. Probate makes sure it is your last valid will, appoints the executor named in your will and supervises the executor’s work. You can do several things now that can help your executor and family later, hopefully much later on.

No. The will must be admitted to probate and the estate of the decedent must be "probated."

Generally, probate is a court proceeding that administers the estate of an individual.

Generally, there are five purposes, many of which have subsets to them:

  1. To determine that the decedent is in fact dead,
  2. To establish the validity of the will,
  3. To identify the heirs and devisees of the decedent,
  4. To settle any claims that creditors may have against the estate of the decedent, and
  5. To distribute the property.

Generally speaking, a public administrator is a person or entity appointed by the State to act when there is no will or relatives.

When one is said to have died "Testate," it means he or she died leaving a will. If one is said to have died "Intestate," it means he or she died without leaving a will.

An "executor" carries out the directions and requests set forth in the decedent's will. An "administrator" is appointed by the court to manage the estate of a decedent who dies intestate.

Very generally speaking they are as follows:

  1. Death of the decedent.
  2. The will is delivered to the executor or Court Clerk.
  3. A petition is filed for the Probate of Will or Letters of Administration.
  4. A hearing is held on the petition.
  5. Letters of Administration are issued by the Court.
  6. Notice to creditors is given.
  7. Inventory and appraisement of the estate is made by an independent probate appraiser.
  8. File Federal estate tax return. Return states "No Tax Due" or specifies an amount due.
  9. Final accounting and petition for distribution.
  10. Final decree of distribution.
  11. Discharge of personal representative.

Yes. Without getting into too much detail it can be sold either at private sale in which the executor of the estate negotiates a transaction with a buyer or at public sale in which the property is sold at public auction.

Sections 6400 through 6414 of the California Probate Code addresses intestate succession and the distributions. The method and manner of intestate distributions is quite complex and therefore one should specifically discuss intestate distributions with his or her legal advisor.