How To Transfer Property Out Of A Trust After Death

How to transfer property out of a trust after death

If you’re the named trustee and you are wondering how to transfer property out of a trust after death, keep reading. There are many things to consider. You need to understand what the trust says. You also need to understand the applicable law. Finally, once you have decided that you should transfer the property out of the trust, then you need to know the mechanics of that. In this short overview, we will try to cover some of the basics.

Decide Whether You Want To Do This Yourself Or Hire An Attorney.

Since you’re researching how to transfer property out of a trust after death, I’m assuming you haven’t talked to a trust attorney yet. I encourage you to hire one. The trust will pay for it. Otherwise, if you decide to do this yourself, and you make a mistake, a beneficiary could sue you. The safest approach is to find an attorney who specializes in trusts.

We have handled hundreds of trust administrations, and have the experience to guide you. Just call us at 602-443-4888.

Understand The Law.

In order to transfer property out of the trust, you will need to understand the law. This includes understanding the legal requirements and the rules governing the trust. You should also consider whether there are any special circumstances that affect your situation.

In Arizona, the administration of a trust is governed by the Arizona Trust Code. That is a set of statutes that list a trustee’s duties. For example, A.R.S. Section 14-10801 states that the trustee is required to “administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries.”

The Arizona Trust Code also provides how a beneficiary can sue a trustee who mismanages the trust. For instance, A.R.S. Section 14-11001 lists some actions that the probate court can take to remedy a breach of the trustee’s duties.

Decide Whether You Need To Go Through Probate.

Attorneys market trusts as a way of avoiding probate. But sometimes it makes sense to go to probate court. For instance, maybe there is an ambiguity in the trust document. Also, sometimes the language in the trust no longer makes sense.

In addition, there may be property that the deceased person never transferred to the trust. In that case, the property may need to go through the probate process. Usually there is a pourover will that says the property needs to get transferred to the trust. After that, then the trustee can administer the trust. Your trust attorney can help you decide what to do.

Understand The Basics About Trusts And Probate.

You should understand the basics about trusts and probate before transferring property out of a trust or estate. This will help you avoid any legal issues.

In a nutshell, if an asset is titled in the name of a trust, then the trustee of that trust can act according to what the trust requires. If an asset is still in the deceased person’s name, then a probate is probably required.

There are exceptions to all of this. You should talk to an attorney to make sure you are doing the correct thing.

Here Are Some Examples Of How To Transfer Property Out Of A Trust After Death.

All of this information assumes that you have talked to an attorney and that you are confident that you can transfer the assets out of the trust. We are also assuming that you are the trustee and have authority to act on behalf of the trust.

Cash accounts.

If you are the trustee, it is best for the trustee to hold onto any bank accounts until administering other assets. You may need the money to repair the deceased person’s home so it can sell. There may also be debts, taxes, and other expenses that you need to pay. The cash account is usually the last thing that you will distribute to the beneficiaries.

Stocks and Bonds Not Held in Investment Accounts.

If there are original stock or bond certificates in the name of the trust, you have two choices. First, you can transfer the investments directly to the beneficiaries. Alternatively, you can sell them first and then distribute the cash.

You will need to contact the transfer agent for the investment and find out what they require. A law firm typically helps its clients with this.

Tangible Personal Property.

Tangible personal property refers to such items as vehicles, photos, and jewelry. It’s the “stuff” that the deceased person owned. You should consider whether to sell these items and later distribute the cash. The other option is to distribute these items outright. Contact the beneficiaries and ask their preference. You don’t want to get sued later because you made a decision that the beneficiaries disapproved of.

Business Interests.

If you are not familiar with managing a business, you need to hire a business attorney immediately. Think of a business as an animal. It needs attention. If you neglect it for too long, it can die. Then you could be responsible for the loss to the trust. The business attorney can work together with the trust attorney to ensure that you are doing everything properly.

Real Property.

If the trust owns real property (like a house), you need to decide whether to sell it or transfer it out of the trust. This depends on what the trust requires. Do not assume you know the answer.

If you determine that you should transfer a house or other real property out of the trust, you do that with a Deed of Distribution. The title standards in your locale will also require that you record a notarized certification stating that you are authorized to sign on behalf of the trust.

Find An Attorney Who Can Help You.

If you have questions about how to transfer property out of a trust after death, you need an attorney who understands the law and can help you navigate the process. We would love to help you. Call us at 602-443-4888. Or use our convenient Contact Form.

ABOUT THE AUTHOR

Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.

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