Selling Property in a Revocable Trust: A Complete Guide
Have you recently inherited property from a loved one? Then you may have heard of a revocable trust. Simply put, trusts allow a third party to hold assets for the beneficiary. A trust lasts for a specific length of time, whether it's for tax purposes or to avoid probate.
The question is, is selling property in a revocable trust possible? And what does that process entail?
Our East Tennessee home buyer explains how revocable trusts work and how you can sell your home in a trust.
What Is a Trust?
A trust is a legal agreement between a trustor and trustee for the benefit of a third party. The three parties involved in a trust include
- Trustor - The trustor, or grantor, is the person who sets up the trust.
- Trustee - The trustee is typically a bank or trust company that holds on to the trustor's assets for the beneficiaries named in the trust.
- Beneficiary - A beneficiary is a person who receives the assets specified by the trustor when they created the trust.
In short, the purpose of a trust is to protect the trustor's assets and distribute them to the beneficiary or inheritor. These three parties can also be the same person.
What Is a Revocable Trust?
A revocable trust is a trust that can be altered or revoked after it's created; this allows the trustor to make changes. The trustor can also add or remove beneficiaries or change how assets are managed.
Revocability means you can cancel the trust without notice or penalty. For example, even if a trust is slated to last a lifetime, the trustor can revoke the trust without prior notice to the trustees.
On the other hand you have irrevocable trusts, which cannot be modified once they're created - unless you have permission from the beneficiaries. Once an irrevocable trust is created, the trustee has control over everything.
What Is the Difference Between a Trust and a Will?
The main difference is a will goes through the probate process while a trust doesn't. Probate is the legal process of validating a will once the person has died. The proceeding can be both costly and time-consuming.
With a trust, there is no probate process once the trustor has passed. Additionally, a trust is effective the day it's created. A will, on the other hand, is only active after the testator (the person who writes and signs the will) is deceased.
Finally, wills are more expansive and cover many different types of assets. Trusts are mostly for estate affairs.
How to Sell a House in a Revocable Trust
Selling as the Trustee
In general, your sale options depend on the situation. For instance, if you own a property in a revocable trust, selling shouldn't be an issue. You can modify the trust, transfer the title to your name, and sell it outside the trust.
If you're both the trustor and the trustee, you can sell your house as the trustee and put your gains back into the trust.
Selling Property Inherited from a Revocable Trust
If you're the sole beneficiary, you can sell the property as you wish.
If there are multiple benefactors, it may be wise to let the trustee sell the home, so the gains are evenly distributed to each person.
Need to Sell Your House Fast?
Nevertheless, even with the legal aspects sorted, selling a house can be a time-consuming process. Not only will you need to make repairs, but you may also have to hold showings and open houses to find a qualified buyer.
If you're looking to close the deal quickly, your best option is to give Reliant Home Buyers of TN a call today!
As a Tennessee native and an expert on local real estate, our owner Justin can make you a fair cash offer for your property.
Call 865-567-6391 or fill out the online form to get in touch with us! We'll set up a 15-minute walk-through of your property to see if we're interested in buying. If we are, we'll make you a FREE, no-obligation offer for your house - even if it needs major renovations or has been vacant for months.