Trust administration can be a long-term responsibility. Transferring real property ownership to a trust is a relatively common practice. People who want to protect their houses from creditor claims or Medicaid estate recovery may transfer them to a trust.
Those funding special needs trusts for vulnerable family members may also transfer the title for the property to the trust to ensure that the beneficiary can retain access to the property without technically owning it.
What are the obligations imposed on a trustee if trust assets include residential properties?
Securing and maintaining the property
In some cases, the real estate transferred to the trust may not be occupied. Trustees may need to secure the property by changing the locks and obtaining vacant property insurance.
They also need to ensure that they properly maintain the residents. Overseeing maintenance is also necessary if people live in the home. Trustees may need to conduct regular inspections, pay taxes and keep the property in habitable condition.
Listing the property or transferring ownership
In scenarios involving a special needs trust, the trustee may eventually need to sell the home when the beneficiary passes. Other times, they may need to arrange for a transfer of ownership.
Perhaps there was a trust used as part of an estate plan for a blended family. After the surviving spouse of the original owner passes, it may be necessary to arrange for the transfer of title to the surviving children of the original owner.
Generally speaking, a trustee has a responsibility to ensure that they maintain assets, act in the best interests of beneficiaries and follow any instructions provided by the trustor. Seeking the guidance of a professional when tasked with trust administration can help people avoid mistakes that could lead to trust litigation.