Let’s talk about trusts. Trusts are a little confusing to those who haven’t used one or know someone who has. The idea of putting your home or other assets into a trust might feel a little concerning, however, it is not as confusing as you would think.
One of the biggest questions that we hear all the time is “can I sell a house that is in a trust?”.
This is a great question. Before putting your home into a trust you need to know what trust home selling options you will have. Or if you are someone who has become a trustee of your recently deceased loved ones trust you are probably wondering the same thing.
What Is a Trust and How Does It Work?
Before we can talk about selling your property that is in a trust we want to make sure that you have a full understanding of what a trust is. Think of a trust as being where you can place all of your assets to keep them safe.
You then become the trustee (the person who has access and full say over the trust). Now you can set a successor trustee who will inherit your trust and distribute your assets accordingly if anything were to happen to you.
Sounds a lot like a will doesn’t it? That is because a trust is a lot like a will but with some differences. The biggest difference being the probate process. Trusts don’t have to go through the process of probate like a will does when you pass.
This is definitely an advantage for your loved ones or those you have left assets to because of how long the probate process can take.
Unfortunately a property in a trust still deals with capital gains tax. You can still claim the standard exclusion rates for capital gains which is still $250,000 for anyone filling as single and $500,000 for anyone filing as married (or joint).
But there is a catch to this. The capital gains exclusion only works if you have lived in the home for at least 2 out of the last 5 years before the home sells.
So now that we understand a little more about how a trust works let’s address how you can sell a home that is in a trust.
Can You Sell a House That Is in a Trust
The answer isn’t as easy as a yes or a no. There are many factors that you will need to take into consideration because every situation is going to be different. Yet, we can say that most of the time, yes you can sell a home that is in a trust. So let us ask, are you the trustee?
If you are a loved one but not the actual trustee of the trust then no you cannot. You either need to be the trustee or you can help the trustee to go through the process of selling the home.
Other than that the overall process of selling the home is very similar to selling any other property that is in your name. There are a few ways that you can go about selling the home.
How to Sell a Home in a Trust
For the sake of simplicity, the easiest way to explain it is that the property in the trust is still basically considered the property of the trustee. The trustee will still have full access and can still sell the home as if it was titled in your name.
Sometimes mortgage lenders can be a little difficult to work with depending on if the property is owned outright or if there is still a mortgage owed on the property. But this isn’t usually a huge problem.
Most of the time you can either work with the mortgage lenders or simply transfer the title of the home from the trust back into your own name. Transferring the title of the house into your name is usually not difficult to do.
Again, all of this depends on the circumstances of your property or trust. But for the most part, selling a home that is in a trust is just as easy as selling a home that is in your own name.
If you aren’t sure what or how to start the process of selling your home that is in a trust give us a call. We have a Southwest Florida real estate expert who can help you better understand how and what process you will need to go through to sell your trust property.
Contact us today at (941) 743-3700 to learn more.