- To accommodate the distribution of the owner’s estate which remains at the time of the owner’s death, without resorting to probate proceedings under a will.
- To retain the interim ability to sell, encumber, lease or remove the property from the trust vesting without the debilities imposed by other estate planning vestings, such as joint tenancy or community property vestings.
A right of survivorship vesting is best: Between spouses who want to best accomplish the passing of their community property to the surviving spouse.
Inter vivos trust needs for a conveyance from the successor trustee on the death of a spouse.
Under these vestings, the right of survivorship may be individually severed by either spouse. Either spouse may deed their interest to themselves with a declaration stating they are terminating the joint tenancy or community property with right of survivorship vesting.
A revocable inter vivos trust is not a vesting or legal entity separate or different from the owner, such as a partnership, LLC or corporate form of ownership.
Any trust is only valid if the trust relationship with the trustee is declared in writing.
The owner’s declaration to establish a trust as the trustor (settlor)
Identification of a trustee (usually the owner) to manage title to properties vested in the trustee as instructed by the trust agreement; Schedule A.
Actual conveyance of property (called the corpus or trust property) to the trustee
Successor, called beneficiaries, to receive the trust property on the death of the owner. Schedule A.
The owner has to sign and record grant deeds conveying their real estate into the trust vesting.
Trust agreements do not need to be recorded but it is good idea to notarize it.
Amending Schedule A for further vestings. Can add properties or successors. But to remove or change, an owner needs to redraft Schedule A entirely.
Underage successors: an owner can add a clause to prohibit the distribution of trust property directly to successors under a certain age.
Guardian
Successor trustees,
Lender won’t accept a inter vivos trust as a borrower since a trust is not an individual or an entity.
The lender require both spouses to individually execute the mortgage documents, including the trust deed to be recorded and insured.
The spouses take the title and the lender’s trust deed is recorded, a grant deed further conveying the property from the spouses into the inter vivos trust vesting will be recorded.
Escrow officer will prepare two grant deeds:
- One from the seller to buyer
- One from buyers to their trust to be recorded after the lender’s trust deed is recorded.
The policy of title insurance is to be issued in the name of spouses. However, only the ALTA homeowner’s policy automatically provides coverage for a later transfer into the revocable inter vivos trust vesting, even though the two spouses are listed as the insureds. Other insurance policies requires an endorsement.
Trustee: one who holds title to real estate in trust for another.
Beneficiary: one entitled to the benefits of properties held in a trust or estate, with title vested in trustee or executor.
Business trust (Massachusetts trusts): a type of business entity which is not recognized in California; out-of-state business trusts are required to first qualify as a corporate entity with the Department of Business Oversight (DBO) before doing business in California.
Trust business: acts as an executor, administer, guardian, or conservator of estate, or as assignee, receiver, depositary or trustee by the appointment of the court or for any purpose permitted by law.
Real estate investment trust: an entity issuing securities held by investors and traded on the stock market, holding title to income-generating property, trust deeds, and treasury bonds.