Title Insurance Requirements for Insuring Trusts

  • Luci Edwards
  • 05/20/22

In today’s world of busy probate courts and exorbitant death taxes, the living trust has become a typical 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 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. On behalf of the trust, only the trustee may own and convey any interest in real property. The trustee may only exercise the powers granted in the faith.

What will the title company require if a trustee holds the title to the property part of the trust?

A certification of trust containing the following information:

  1. Date of execution of the trust instrument,
  2. Identity of the trustor and trustee,
  3. Powers of the trustee,
  4. Identity of person with power to revoke trust, if any,
  5. Signature authority of the trustees,
  6. Manner in which title to the trust assets should be taken,
  7. Legal description of any interest in the property held by the trust, and
  8. A statement that the trust has not been revoked, modified, or amended in any manner which would cause the certification to be incorrect and that the certification is being signed by all currently acting trustees of the trust

My trust contains specific amounts of money to be given to various charities which are 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 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 cannot 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?

The 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 trust provisions and, thus, may only act within the terms of the faith. The probate code contains general powers that are sufficient for title insurers to rely on for sale, conveyance, and refinance purposes unless limited by the trust agreement.

Article by CLTA

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