How to Transfer Real Estate into a Trust

A grantor may choose to transfer real property into a trust. For trustees, funding a trust with real estate involves transferring the property’s title, drafting a new deed and getting it signed, and assuming responsibility for the property.

The grantor transfers the property’s title

The grantor transfers title in the property either directly to the trust to a nominee partnership, an entity that acts as owner of the property on behalf of the trustee.

By executing a new deed to the property and filing it with the appropriate government office, the grantor usually completes the transfer. The new deed usually goes to the local Registry of Deeds or its equivalent.

In some states that limit property tax increases to an annual percentage, transferring real estate may force the property’s reappraisal and trigger large property tax increases. After the transfer is complete, you can’t change your mind.

Draft a new deed

If you have the original deed, drafting a new one is easy. Copy the old deed except for changing the names of the parties.

You must also check on what, if any, constitutes the standard consideration in your state in the case of a gift. On the new deed, the consideration may be worded something like “for $1 and other good and valuable consideration.” Even though the transfer is a gift, most states require that some consideration be stated on the deed.

If you don’t have the original deed, go to the local register of deeds office where the real estate is located and ask how you can best locate the record of that deed.

If an attorney didn’t prepare the deed, have one review it before signing. A problem with the deed can affect clear title to the property.

The grantor signs the new deed

The grantor signs the new deed in the presence of a notary public, who affixes his or her official seal. The original deed that you copied from will show how many witnesses your state requires. Record the new deed with the Registry of Deeds or the land court to complete the transfer.

Some real estate comes with a mortgage. Don’t attempt to transfer mortgaged property from the grantor into the trust without first obtaining the mortgage company’s approval, in writing. You, as trustee, will assume the grantor’s mortgage. It will have documents you must complete, sign, have notarized, and record along with the new deed.

You assume all responsibility for the property

After the trust officially becomes the owner of the real estate, you, the trustee, assume all the responsibilities for that property. Don’t forget to pay the mortgage, if you have one, or the real estate taxes. And don’t forget to insure it, and be sure that your name as trustee is on the insurance as an insured.