Guide To Selling The Family Home in a Living Trust
The parents are now gone. You need to understand the process of selling a home in a Living Trust because you are the Successor Trustee (from now on we’ll just call you the Trustee, ok?)
Things might get a little cuckoo but read on. Here are some things you should do.
Notify Co-Trustee and any relatives or interested parties.
Make sure that all interested parties are aware that you are the named Successor Trustee. If there is a co-trustee make sure you are in contact and agree on how to communicate.
Read the Living Trust and the Will
Both you and any co-trustees should have the latest version of the living trust and will. Read it thoroughly to understand the terms, directions and involved parties.
Here are some questions to consider
- Is the home in a Living Trust?
- Do you have the authority to sell the home?
- Does your co-trustee need to sign everything or do you have “single signing authority”?
Hire a Trust Administrator
Selling a home in a living trust is just one small part of most Living Trusts. There are laws, regulations and taxes related to this trust and most trustees are just normal people. A professional trust administrator makes sure that the terms of the trust are carried out properly as well as following all the laws and rules.
Secure the property
If the Family Home is now vacant there are a number of steps you should take to secure the property. Your duty is to protect the value of the home for the trust – this means maintaining the home and securing it against vagrants and vandals.
- Arrange to pay the gardener, utilities, mortgage, HOA and insurance
- Change the locks and forward all mail
- Notify the homeowner’s insurance that the home is vacant. Some policies will deny coverage if the home is vacant.
- Alert local law enforcement that the home is vacant
- Ask neighbors to alert you if they see anything suspicious
- Install motion sensitive lights on the exterior and timers on lights inside.
Before anyone comes to collect personal property review all the personal documents and gather the following:
- You just need the most recent statement,
- Be sure to check for second and third mortgages
- You do not need the Grant Deed if the mortgage is paid off
- You will need to cancel or continue payment for all bills
- Receipts (home improvements)
- You may need this for the home appraisal
- You need account numbers and who to contact
Most Trust Administrators recommend a certified appraisal on any real estate for tax purposes. If you need one, give us a call for our best referral.
You might also need professional appraisals for fine art or jewelry.
Distribute/Donate/Trash Personal Property
Be careful. You probably thought selling a home in a living trust was going to be difficult. You had no idea people would come to blows over the family room cuckoo clock.
However, in order to sell a home in a living trust for top dollar you need to get the cuckoo clock, the velvet paintings of Elvis and the precious Hummel figurines out of the home. Everything in the home falls into three categories: distribute, donate and trash.
Every family deals with stuff distribution differently, but make sure you set a deadline for stuff pick up. I’ve seen families take years to get their stuff out of the house!
If there is enough left over you can hire an estate salesperson or you might consider donating everything to a local charity. The Salvation Army is a DIGGS favorite.
Get The Home Ready For Sale
When selling a home in a living trust consider consulting with family members who are not trustees early in the process. If you seek their opinions upfront you might save a lot of drama later on.
The process and strategy for getting ready for market are the same as any other sale, but the money can look a bit different. A $50,000 bump in the sales price is less meaningful if it is divided among six siblings. It might make more sense to sell “as is” rather than invest in painting or staging.
You have a fiduciary duty to protect the assets of the trust, but this can include the value of time and cash flow.
Liability and Disclosure
Selling a home in a living trust means you have different disclosure requirements than a “normal” sale. There is a lower expectation of home knowledge and there are fewer required disclosures for you.
However, you must disclose anything you know. For example, if you know about an ongoing flooding problem because you helped your parents research installing garden drains, you have to disclose. If you do not, the trust could be held liable.
You don’t need to do this alone.
You might feel like you’ll never be able to let go of the family home.
At some point, though, you’ll have to do something.
You need guidance and help, but you do NOT want to be sold. We understand.
We are here for the long haul, not the quick sale.