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How to Properly Transfer Real Property to an Estate Trustee

Many people associate trusts with wealthy philanthropists and do not see them as applicable to the average person. However, trusts offer estate planning benefits that apply to everyone and can be a cost effective tool to distribute property after death. Trusts allow the creator to have more control over how his/her property is ultimately distributed, and can avoid the costly and public process if properly designed. One critical aspect of designing any type of trust is the valid transfer of property from the settlor (the person creating the trust) to the trust. If the trust does not hold title to any property when the settlor dies, the trustee has nothing to distribute and the entire intent of the settlor in creating the trust is defeated. Therefore, knowing how to effectively and properly transfer title of property to the trust is essential to achieving the settlor’s objectives. A recent decision by a Florida appellate court illustrates how improper property transfer can endanger the legitimacy of the trust. Two brothers, serving as trustees for the benefit of six other siblings, claimed to own outright property transferred to them in their capacity as trustees because the documents conveying the property did not mention the trust and the trust document was not recorded in the public records. The appeals court determined that while innocent buyers would not be bound by the trust, the brothers, as trustees, were bound by their fiduciary duties and did not have the authority to dispose of trust property and keep the proceeds.

Transferring Real Property

Like any sale of real property, property conveyed in connection to a trust must be done in writing and in the presence of two witnesses. However, these formalities do not apply to property transferred via will or testamentary instrument. Typically, the transfer is from the settlor to a trustee so that the trustee has the power to make decisions about the land related to things like mortgages, improvements and leases. The deed transferring the land to the trustee normally mentions the trust document in its contents or includes a copy of the trust instrument, so it is clear that, while the trustee has legal authority to deal with the land, the beneficiaries own the interest in the land and any proceeds gained from it.

Florida Land Trust

This type of trust allows the grantor to create a trust for the purpose of buying, selling and holding real estate while maintaining the confidentiality of the beneficiaries. It is common for the beneficiary to also be grantor, but this is not a requirement. A trustee still administers the property and has full rights to manage it. Further, liabilities tied to the land, like liens, judgments or mortgages, do not impact a beneficiary’s interest in the property, so the beneficiary does not have financial exposure if the trustee makes a bad business decision. The beneficiary usually has the authority to direct the trustee in management of trust property, but does have the option of delegating that power to another person or entity.

Contact a Florida Estate Planning Attorney

Trusts are great estate planning tools, but there is a lot of legal regulation around setting them up and administering them. Consequently, it is important to work with an experienced estate planning attorney to ensure that your intent in the creating a trust is realized. Additionally, questions about trustee authority or the distribution of trust property are also matters that should be reviewed by a trust and estate lawyer. The Tampa law firm of Bubley & Bubley, P.A. can answer all of your questions related to trust and estate law. Contact us to schedule a consultation.

Location & Directions

Bubley & Bubley, P.A. is located in Tampa, FL and serves clients in and around Brandon, Odessa, Tampa, Oldsmar, Land O Lakes, Thonotosassa, Valrico, Wesley Chapel, Lutz, St Petersburg, Plant City & Brooksville, Safety Harbor, Holiday, Trilby, Crystal Beach, Ozona, Apollo Beach, New Port Richey, Clearwater, Tarpon Springs, Port Richey, San Antonio, Spring Hill, Lithia, Pasco County and Pinellas County.

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