Transferring title from a living trust

[DocPit45]

What is the name of your state? South Carolina
Sam Jones is named successor trustee for The Frank Smith Living Trust. Sam Jones also is named in the trust as the beneficiary of a house. The original trustee, Frank Smith, dies. My understanding is that the successor trustee, Sam Jones, also named as the beneficiary of the house, now owns the house. He could pay property taxes in his own name. He could sell the house with the signature "Sam Jones, as Trustee of The Frank Smith Living Trust," (assuming he can produce a death certificate and the trust document or a trust certification). Is that correct? Is there any benefit to his filing a warranty deed to move the title to his own name, "Sam Jones," instead of "Sam Jones, as Trustee..."?

 

[Just Blue]

What is the name of your state? South Carolina
Sam Jones is named successor trustee for The Frank Smith Living Trust. Sam Jones also is named in the trust as the beneficiary of a house. The original trustee, Frank Smith, dies. My understanding is that the successor trustee, Sam Jones, also named as the beneficiary of the house, now owns the house. He could pay property taxes in his own name. He could sell the house with the signature "Sam Jones, as Trustee of The Frank Smith Living Trust," (assuming he can produce a death certificate and the trust document or a trust certification). Is that correct? Is there any benefit to his filing a warranty deed to move the title to his own name, "Sam Jones," instead of "Sam Jones, as Trustee..."?

Are you using real names here? Is this a real situation (if yes, who are you in this situation?) or a homework assignment?

 

[adjusterjack]

Sam Jones is named successor trustee for The Frank Smith Living Trust. Sam Jones also is named in the trust as the beneficiary of a house. The original trustee, Frank Smith, dies. My understanding is that the successor trustee, Sam Jones, also named as the beneficiary of the house, now owns the house. He could pay property taxes in his own name. He could sell the house with the signature "Sam Jones, as Trustee of The Frank Smith Living Trust," (assuming he can produce a death certificate and the trust document or a trust certification). Is that correct?

Yes.

Is there any benefit to his filing a warranty deed to move the title to his own name, "Sam Jones," instead of "Sam Jones, as Trustee..."?

Short term, probably not, if the intention is to sell right away. If he sells it out of the trust, the title/escrow company or attorney will take care or creating the appropriate deed.

Otherwise, if it was me, I would get it into my own name or into my own trust as soon as possible because Frank's trust doesn't determine what happens when Sam dies.

 

[LdiJ]

What is the name of your state? South Carolina
Sam Jones is named successor trustee for The Frank Smith Living Trust. Sam Jones also is named in the trust as the beneficiary of a house. The original trustee, Frank Smith, dies. My understanding is that the successor trustee, Sam Jones, also named as the beneficiary of the house, now owns the house. He could pay property taxes in his own name. He could sell the house with the signature "Sam Jones, as Trustee of The Frank Smith Living Trust," (assuming he can produce a death certificate and the trust document or a trust certification). Is that correct? Is there any benefit to his filing a warranty deed to move the title to his own name, "Sam Jones," instead of "Sam Jones, as Trustee..."?

I suppose that he can leave the house in the trust, however that will make things a bit more complicated if he dies and there is not a successor beneficiary. If he prefers the house to remain in a trust he might consider transferring it to a living trust of his own, and naming whomever he wants to be his beneficiary.

 

[TrustUser]

i dont know how south carolina does things, but it could have property tax implications

 

[Taxing Matters]

What is the name of your state? South Carolina
Sam Jones is named successor trustee for The Frank Smith Living Trust. Sam Jones also is named in the trust as the beneficiary of a house. The original trustee, Frank Smith, dies. My understanding is that the successor trustee, Sam Jones, also named as the beneficiary of the house, now owns the house.

No. He does not yet own the house. The house is owned by the trust, of which he is trustee. For him to own the house, he needs to have the trust convey the property to him so that title is now in his name rather than the trust.

He could pay property taxes in his own name.

The tax collector would happily take the money from anyone to pay the tax. But since the property is still in the trust and Sam does not own it, Sam could not take the federal property tax deduction for the taxes paid. The reason is that Sam doesn't own the property, the trust does.

He could sell the house with the signature "Sam Jones, as Trustee of The Frank Smith Living Trust," (assuming he can produce a death certificate and the trust document or a trust certification). Is that correct?

Yes, he could do that. But the reason he must sign the deed as trustee is because the trust is the owner, not himself. What this also means is that the TRUST is the one who gets the money from the sale, not Sam.

Is there any benefit to his filing a warranty deed to move the title to his own name, "Sam Jones," instead of "Sam Jones, as Trustee..."?

Yes. For starters, he'd be able to take the property tax deduction on his federal income tax return (assuming that he has enough itemized deductions to exceed his standard deduction). If he's renting the property and would have a net loss taking into account depreciation, that loss will do him no good on his personal tax return if the trust owns the property. On the flip side, if he's living in it as his own personal residence then he'll not be able to use the capital gain exclusion that federal tax law provides once he's both lived in it and owned for at least 2 years because to get the benefit of that exclusion he has to be the owner of the property. If the trust owns it, he doesn't get that benefit. If Sam is a senior, then in some states he wouldn't get the benefit of any property tax benefits available to seniors because, again, he'd have to be the owner of it.

He'd also likely find it easier to borrow money against the property, and at lower rates (assuming he has good credit) than if the property is owned by the trust. It might also be cheaper to insure, too, especially if he is living in the home.

For most people, keeping the property in the trust would not benefit them. The main exception would be if Sam had some real risk of finding himself deep in debt. In that case, keeping the property in the trust would pose to the creditors an additional hurdle to getting to the property, though in many states they could overcome that. Note, though, that having the trust own the property might mean Sam doesn't get to protect the property with whatever homestead allowance that his state provides. If the homestead is generous enough, it may even be better for asset protection purposes to get the house out of the trust.

 

[zddoodah]

Sam Jones is named successor trustee for The Frank Smith Living Trust. Sam Jones also is named in the trust as the beneficiary of a house. The original trustee, Frank Smith, dies. My understanding is that the successor trustee, Sam Jones, also named as the beneficiary of the house, now owns the house.

Whether that's correct depends on, among other things, the specific terms of the trust, the extent of any debt and how the house is titled.

He could pay property taxes in his own name. He could sell the house with the signature "Sam Jones, as Trustee of The Frank Smith Living Trust," (assuming he can produce a death certificate and the trust document or a trust certification). Is that correct?

I'm not sure what "pay property taxes in his own name" might mean, but you've given no information on which anyone could base an informed comment about Sam's ability to pay property taxes. As far as how a property transfer might work, see above.

 

[DocPit45]

Whether that's correct depends on, among other things, the specific terms of the trust, the extent of any debt and how the house is titled.



I'm not sure what "pay property taxes in his own name" might mean, but you've given no information on which anyone could base an informed comment about Sam's ability to pay property taxes. As far as how a property transfer might work, see above.

Assume that the original Trustee/Grantor, Frank Smith, owned the house outright. There are no encumbrances. Upon the death of Frank Smith, Sam Jones, the successor trustee and the beneficiary of the house as assigned in the trust, owns the house as "Sam Jones, Trustee of the Frank Smith Living Trust." Correct? However, Sam Jones' bank accounts are in his own name. So, if he needs to write a check to pay the property tax on the house he has inherited, he needs to write that check as "Sam Jones," not as " Sam Jones, Trustee...." My guess is that the county could care less if the check is issued by Mickey Mouse, so long as it's a valid check that covers the taxes. I just want to be sure I'm right about that.

 

[Zigner]

Assume that the original Trustee/Grantor, Frank Smith, owned the house outright. There are no encumbrances. Upon the death of Frank Smith, Sam Jones, the successor trustee and the beneficiary of the house as assigned in the trust, owns the house as "Sam Jones, Trustee of the Frank Smith Living Trust." Correct? However, Sam Jones' bank accounts are in his own name. So, if he needs to write a check to pay the property tax on the house he has inherited, he needs to write that check as "Sam Jones," not as " Sam Jones, Trustee...." My guess is that the county could care less if the check is issued by Mickey Mouse, so long as it's a valid check that covers the taxes. I just want to be sure I'm right about that.

I agree that they're really not going to care, but why pay by check? Pay online.

 

[Taxing Matters]

My guess is that the county could care less if the check is issued by Mickey Mouse, so long as it's a valid check that covers the taxes. I just want to be sure I'm right about that.

As I said, the tax collector will happily take the payment from Sam or anyone else who wants to pay the taxes.

 

[zddoodah]

Assume that the original Trustee/Grantor, Frank Smith, owned the house outright.

I interpret that to mean that Frank never transferred title into the trust (typically accomplished by transferring title "from Frank Smith, an unmarried man [or whatever] to Frank Smith, Trustee of the Frank Smith Living Trust"). Is that what you intended?

There are no encumbrances.

Ok. What about other debt that Frank owed? Taxes?

Upon the death of Frank Smith, Sam Jones, the successor trustee and the beneficiary of the house as assigned in the trust, owns the house as "Sam Jones, Trustee of the Frank Smith Living Trust." Correct?

Not unless title has been transferred to him in this way. It doesn't happen automatically.

However, Sam Jones' bank accounts are in his own name. So, if he needs to write a check to pay the property tax on the house he has inherited, he needs to write that check as "Sam Jones," not as " Sam Jones, Trustee...." My guess is that the county could care less if the check is issued by Mickey Mouse, so long as it's a valid check that covers the taxes. I just want to be sure I'm right about that.

That's not correct. More likely, the county would not care less. "Could care less" means that the person or entity does care. As "Taxing Matters" previously explained, the county likely will not care who pays the property taxes (but there could be income tax implications, as he also explained).