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Title Insurance
Requirements for Insuring Trusts
In today's world of busy probate
courts and exorbitant death taxes, the living trust has become a common
manner of holding title to real property. The following may help you
understand a few of the requirements of the title insurance industry if
title to property is conveyed to the trustee of a living trust.
What is a trust?
An agreement between a trustor and trustee for the trustee to hold title to
and administer designated assets of the trustor for the use and benefit of
one or more beneficiaries.
Can a trust itself acquire and convey interests in real property?
No. The trust is an arrangement between a trustee and the trustor. Only the
trustee, on behalf of the trust, may own and convey any interest in real
property. The trustee may only exercise the powers granted in the trust.
What will the title company require if a trustee holds the title to the
property which is part of the trust?
First, a certification that the Trust and amendments (if any) are complete,
the names of the present trustees of the trust, and a statement that the
trustees are empowered by the trust to complete the proposed transaction.
Second, at the discretion of the title company, a full copy of the trust and
any amendments.
My trust contains certain amounts of money to be given to various
charities which is none of your business. Can I omit these pages?
Because many different provisions may be on the same page, the answer must
be no -- but if the title company requires a copy of the trust, it may
accept a copy with those amounts blacked out.
If there is more than one trustee, can just one sign?
Maybe. The trust must specifically provide for less than all to sign.
Can the trustee give someone a power-of-attorney?
Only if the trust specifically provides for the appointment of an
attorney-in-fact.
What will the title company require if all the trustees have died or are
unwilling to act?
If the trustor is not able to do so, or the trust provisions prohibit the
trustor from appointing a new trustee, the court may do so.
How does a notary acknowledge the signature of the trustee?
Title is vested in the trustee. Hence, if the trustee is an individual or a
corporation, then the new general form of acknowledgment will be prepared to
reflect the intrinsic nature of the trustee.
How would the deed to the trustee ordinarily be worded to transfer title
to the trustee?
"John Doe and Mary Doe, as trustees of the Doe family trust, under
declaration of trust dated January 1,1992."
Are there any limitations on what a trustee may do?
Yes, the trustee is limited principally and most importantly by the
provisions of the trust and, thus, may only act within the terms of the
trust. The probate code contains general powers which, unless limited by the
trust agreement, are sufficient for title insurers to rely on for sale,
conveyance, and refinance purposes.
Article by CLTA
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