Selling With a Trust - What You Need To Know

Posted by: Christy Pawloski 7 years ago

Quite often one of our sellers will sell on behalf of a trust. What this means is that the "seller" is actually the entity of the trust, not the individual person. When it comes to selling on behalf of a trust, there are generally two scenarios:

Selling as a primary trustee - in this situation the person signing on behalf of the trust "owns" the trust, ie: John Smith as trustee of the John Smith Trust.
Selling as a successor trustee - in this situation the person signing on behalf of the trust is selling in succession after the primary trustee(s) has passed away.

In either case, there is a special document that the title company will need in order to close - a Certificate of Trust Existence (CTE). This document outlines basic information about the trust, most importantly, who can sign on behalf of the trust. This document is recorded at the county with the closing documents. This helps to create a more complete chain of title by proving the authority of the person signing on behalf of the trust.

Who can prepare this document depends on the capacity of the trustee. If the trustee is a primary trustee, most title companies we work with will prepare the CTE for the trustee, drafting it based on basic information from the trust document itself, and the trustee will sign the document at closing. If the trustee is a successor trustee, an attorney will need to prepare and sign the CTE, and have it delivered to the title company before closing.

Another item to keep in mind when it comes to selling on behalf of a trust is the distribution of the proceeds. Once the sale is closed, the proceeds check will be in the name of the trust. In order to deposit the check, most banks will require a separate account in the name of the trust.

If you have any questions relating to selling with a trust, drop us a line and we'll be happy to answer your question!

Christy Pawloski
Marketing/Closing Director
Mike Street Team Assistant