Real estate transactions can become more complicated when a property owner dies or is no longer able to handle the transaction personally.
One way to prepare for those circumstances is to hold real estate in a personal trust. For homeowners who already have a trust or are considering one, how the property is titled can have a significant impact on who has the authority to deal with it later.
The Trustee, Not the Individual, Handles the Property
When real estate is properly transferred into a personal trust, the trustee has the authority to act on behalf of the trust. That can include signing documents and transferring or selling the property.
The advantage becomes particularly important when the original trustee can no longer act.
A trust generally identifies a successor trustee who can step into that role. If the original trustee dies, for example, the successor trustee can take over and handle the property according to the terms of the trust.
That continuity can make a real estate transfer considerably easier than trying to determine who has authority over a property after the owner’s death.
Why This Can Be Important During a Sale
Timing doesn’t always cooperate with a real estate transaction.
A seller’s circumstances can change quickly after a property goes on the market. A serious health issue may arise, a move to be closer to family may happen sooner than expected, or the seller may die before the transaction is completed.
Without advance planning, those events can create questions about who can sign documents and whether the transaction can proceed as anticipated.
When the property is held in a personal trust and an appropriate successor trustee has been named, there may already be someone authorized to step in and deal with the real estate.
A Power of Attorney Works Differently
A power of attorney can also be useful when a property owner needs another person to act on their behalf. There is, however, an important distinction between a power of attorney and a trust.
The authority granted under a power of attorney generally ends when the person who granted it dies. If a property owner dies before a sale is completed, the person holding the power of attorney cannot simply continue acting under that authority.
A properly established trust can provide continuity because the successor trustee’s authority does not depend on the original trustee remaining alive.
The Property Has to Be Properly Titled
Creating a trust by itself is not enough. If the goal is for the trust to control the real estate, the Deed into Trust needs to be recorded with the county recorder’s office.
This is an important detail because homeowners sometimes establish trusts but never change the title to their real estate. When that happens, the successor trustee may not have the authority over the property that the homeowner expected.
Reviewing how a property is titled can therefore be an important part of planning for its eventual sale or transfer.
Planning Before the Transaction Begins
A personal trust is not the right solution for every homeowner, and other options may be appropriate depending on the circumstances.
The larger point is to consider who will have authority over the real estate if circumstances change.
That conversation is much easier to have before a property owner becomes seriously ill, loses the ability to handle their affairs, or dies while a sale is underway. For homeowners who want their real estate to be easier to sell or transfer when someone else needs to step in, a personal trust can provide a practical way to prepare.
The Minchella & Associates Difference
With over 40 years of experience in Illinois real estate law, Erica Minchella has represented thousands of home sellers and buyers, landlords, and commercial and investment property owners.
For more information, schedule a consultation today.
