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Title Insurance Requirements for Insuring Trusts

By Terry Michaud OfficeNovember 08, 2017
Title InsuranceTrustsEstate Planning

In today's world of busy probate courts and exorbitant death taxes, the living trust has become a common manner of holding title to real property. The following information will help you understand the requirements of the title insurance industry if title to property is conveyed to the trustee of a living trust.

Understanding Trusts

What is a Trust?

A trust is an agreement between a trustor and trustee for the trustee to hold title to and administer designated assets of the trustor for the use and benefit of one or more beneficiaries.

Property Ownership in Trusts

  • The trust itself cannot acquire or convey property
  • Only the trustee, on behalf of the trust, may own and convey property
  • The trustee may only exercise powers granted in the trust

Title Company Requirements

When a trustee holds title to property that is part of a trust, the title company will require a certification of trust containing:

  1. Basic Trust Information:

    • Date of execution of the trust instrument
    • Identity of the trustor and trustee
    • Powers of the trustee

  2. Operational Details:

    • Identity of person with power to revoke trust, if any
    • Signature authority of the trustees
    • Manner in which title should be taken

  3. Property Information:

    • Legal description of property held by the trust
    • Statement that the trust hasn't been revoked or amended

Common Trust Questions

Privacy Concerns

  • Trust amounts for charities can be redacted
  • Financial details can be blacked out
  • Complete pages must be provided

Multiple Trustees

  • All trustees must sign unless trust specifies otherwise
  • Trust must explicitly allow for less than all trustees to sign

Power of Attorney

  • Only allowed if trust specifically provides for it
  • Must be explicitly stated in trust document

Trustee Succession

If all trustees die or are unwilling to act:

  • Trustor may appoint new trustee if able
  • Court may appoint if trustor cannot
  • Must follow trust provisions

Documentation Requirements

Notarization

  • Title is vested in the trustee
  • Acknowledgment reflects trustee's role
  • Uses general form of acknowledgment

Proper Deed Wording

Example format: "John Doe and Mary Doe, as trustees of the Doe family trust, under declaration of trust dated January 1, 1992."

Trustee Limitations

  • Bound by trust provisions
  • Limited by probate code
  • Must act within terms of trust

Important Considerations

  1. Document Requirements

    • Trust certification
    • Proper notarization
    • Correct deed format

  2. Trustee Authority

    • Limited by trust terms
    • Governed by probate code
    • Must be clearly documented

  3. Legal Consultation

    • Recommended for complex situations
    • Helps ensure proper documentation
    • Protects all parties' interests