Selling a California house in a trust may seem like a complicated process — and maybe it is. However, this post aims to break the process down into digestible bits.
First, let’s begin with a simple definition.
What is a Trust?
A trust is a fiduciary relationship in which a party (a trustor) gives another party (the trustee) the right to hold title to the property for a third party’s benefit (the beneficiary).
In other words, the trust assets always go to the trust beneficiaries.
An excellent example is an inheritance trust that involves a wealthy parent leaving a financial advisor as a trustee. That way, the trustee can dispense the inherited property without the issue of probate.
Besides avoiding probate, trusts are established for three other reasons. These include:
- Ensuring fair asset distribution
- Avoiding or reducing estate taxes
- Reducing unnecessary paperwork
As said earlier, selling a home inside a trust under California law can be complicated. So, let’s break it down.
Tips for Selling a California House in a Trust
Here are some things to note when selling a California property in a trust.
1. Review the Trust Document
The first step is to review the trust document to ensure the trustee has the right to sell the document.
In most cases, a trustee usually has the right to sell a California house that’s inside a trust. Not only are they in charge of maintaining a trust asset, but trustees also have the discretion to sell a house.
However, that only works if the house is not a specific gift to the beneficiary. Also, selling the house shouldn’t harm the trust itself.
2. Find a Buyer
After confirming the right to sell, the next process involves selling the property.
Your first instinct might be to contact a real estate agent in California. While that’s not a terrible idea, realtors do come with a 4.92 percent commission fee.
That means paying a whopping $33,600 commission on your $684,000 California property. That’s massive!
Alternately, you could sell your property to a cash buyer to save more money on commission.
3. Close the Sale
At this point, you have reviewed the trust document and found a buyer. The next step is to close the sale.
Unfortunately, this step is not as simple as a regular real estate sale. Besides providing sufficient proof that the trust is valid, you also have to prove that the trustee has the right to sell the property. This often requires:
- A Certificate of Trust signed by a trust attorney
- The death certificate of the trustor
- A tax ID number
Again, you can bypass probate altogether when selling the property.
4. Get Paid
With all the documents and rights verified, you can finally close the sale on the California house in trust. Of course, that can only happen after the beneficiary, trustee, and buyer reach an agreeable deal.
Earnings from the property sale become a part of the trust after the sale is finalized. Alternately, the trustee can send the money to an account for safekeeping or give it directly to the beneficiary.
To Wrap Up: Selling a California House in a Trust Without a Trustee
The process of selling a California house without a trustee is a little more complicated.
First, you have to review the document to ensure that the trustee can transfer the real estate title. After that, you only have to fill a deed form and file it with a local property office to complete the transfer.
Finally, you can contact a real estate agent or cash buyer to sell your California house in trust.