Living Trust vs Joint Tenancy

[milehightrustee]

Well, Bill had a long talk with the attorney. He discovered that what I told him was correct. If he were to make his future wife a joint tenancy owner of his property it would kill his Trust. When he dies the ranch would go to her and his Trust would hold no water. He does not want that to be the final disposition of his property. He wants it to go to his Niece and Nephew. Funny, his wife to be now wants him to list her two children, grown, as the beneficiaries of his Life Insurance. Bill is having some second thoughts to say the least, about marrying this woman.

I have to admit, I wasn't sure of this myself. Apparently if a piece of property is in a Trust and the Trustor gives someone a Joint Tenancy or if the Trustor is incompetent and his POA were to do the same thing it would kill the Trust and the property would go to the joint tenant upon the death of the Trustor. Good lesson here.

 

[curb1]

As soon as Bill re-titles the property, it leaves the trust. Let us know when Bill starts looking for a different person to marry.

You said, "it would kill the Trust". It wouldn't necessarily kill the trust, but it would take that piece of property out of the trust.

 

[tranquility]

My take is that milehightrustee has a keen sense of the law. Not only does he know the facts better (Which most OPs do.), he knows the law.

Does anyone have any disagreement with anything he has said?

 

[TrustUser]

hi milehigh,

i think the main lesson to learn is that the disposition of an asset is dependent upon it's titling.

the language in a trust only dictates for those assets that the trust owns.

if your friend ended up re-titling an asset from the trust with him and this new wife as joint tenants, then that titling is what would be used, until such time that it might be re-titled.

btw, a quit claim deed would not be used to make the 2 joint tenants. it is used when one of the grantors releases his claim on the property.

for example if husband and wife own a piece of property, and there is a divorce in which the wife becomes sole owner, then there could be a quit claim deed by the husband to the wife.

it is not uncommon for 2 or more trusts to have ownership in a property as tenants in common. in fact this is somewhat common with properties held for investment.

i wont say for positive, but i dont think a trustee could have a joint tenancy with another entity. the whole idea of a trust is that it does not die, like a person does. if the trustee dies, the language in the trust has a successor trustee to take his place. so if a deed like that was actually recorded, it might be deemed illegal, or certainly cause some cloud on the title.

what i think would need to occur, is that the husband would create a grant deed that would say john smith, trustee of the abc trust hereby grants to john smith and mary jones as joint tenants.

you would probably want to talk to a title company that was providing title insurance about how they want to see the chain of title. they might prefer the trustee to take it out of trust first, by granting to himself as an individual. and then a second deed granting to him and his partner as joint tenants.

that might vary depending on the title company. but you would want to make sure that you have title insurance on the property.