How to sell inherited real estate held in a trust

If real estate is held in a trust and you are the trustee, you can transfer ownership before or after the sale.

• Option 1: If you are the trustee, you can sell the property in the trust as if it was a normal sale under your name. You can then distribute the proceeds to the beneficiary or beneficiaries according to the trust documents. If there are multiple beneficiaries, this is generally recommended as it requires fewer steps.

  • When listing the property, you will need to show the trust documents to the real estate agent to confirm you are authorized to sell the property. The title company will also request the trust documents, a death certificate, the trust tax ID number, and potentially a Certification of Trust signed by an attorney.

  • After the sale of the property, assets can then be distributed or held in the trust.

• Option 2: You can transfer the property to the beneficiary or beneficiaries before the sale.

  • If there is one beneficiary, you can transfer it into their name, and they could sell the property. This may help reduce the risk of conflict between the trustee and the beneficiary.

  • If there are multiple beneficiaries named, it is generally more complicated to re-title the property beforehand than to just sell the property in the trust and then distribute the assets. The options for joint-ownership differ by state and situation, but include: joint tenancy, tenancy in common, or if the joint owners are married, community property.

  • You will need to transfer the home title from the trust into the beneficiary’s name or beneficiaries’ names with a deed of trust/quitclaim/grant deed form. Every state is different, so you’ll need to check with a lawyer about rules on notarization, witnessing, and forms. The deed should include information that the transfer is not a sale so that there is no transfer tax based on the sale price due.

  • The trustee then needs to sign the deed as the trustee and file the deed with the local property/land records/county recorder/register of deeds office. If you are transferring the property out of the immediate family, you may also have to file a property value re-assessment form. There may also be a local form that must be filed with the deed. There may be small $10-25 fee.

  • If there is a mortgage, the debt will go with the property, unless the trust document says that it must be paid out of the trust before transfer. The new owner then needs to talk to the mortgage organization to see if they can assume the mortgage or refinance.

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