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August 23, 2022

What is the best way to transfer real estate to a Trust?

The best method to move real estate into your Trust depends on various factors. Ultimately, you should consult an attorney. However, here are some general considerations.

The best method for transferring real estate to a Trust is highly situational. Here are some examples:

LLC-owned real estate:

If you have a single member LLC (or you and a spouse) that owns real estate, typically, it is best to transfer that LLC ownership out of your name, personally, and to the name of your Trust. This transfer requires following some necessary formalities and usually includes:

– A member resolution.

-Executing transfer documents.

-Amending your operating agreement.

-Issuing new membership certificates.

Observing LLC formalities is essential for an LLC to shield your personal assets from LLC liabilities properly. However, having your LLC owned by your Trust allows your LLC-owned assets to avoid probate upon your death.

Warranty Deed, Special Warranty Deed, or Quitclaim Deed:

Each of these deeds offers the receiver (or “Grantee”) a different level of assurance that the property has a clean chain of title. Typically, you can only transfer your real estate by the same form of deed used when you received it, so if your deed is a “Warranty Deed,” that is typically the type of deed used to transfer your real estate from your name personally to the name of the Trust.

Beneficiary Deed:

A transfer via Beneficiary Deed only takes effect after you die. In some limited circumstances, that would make this a good vehicle for transferring Real Estate to a Trust. However, one critical function of a Trust is that it still operates for your benefit if you are incapacitated. By using a Warranty Deed, Special Warranty Deed, or Quitclaim Deed, your Successor Trustee would be able to manage your real estate for your benefit during your incapacity. With a Beneficiary Deed, they could not.

This article represents the opinion of the author and is intended for educational purposes. This article does not constitute legal advice, nor does it create an attorney-client relationship. One should always consult with an experienced attorney before making estate planning decisions.

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