INSURING LIVING TRUSTS – Title Company Requirements
By Barabara Pronin
To understand title insurance requirements for insuring title in a living trust, it’s helpful to review a few terms:
- A trust is an agreement between one or more trustors and trustees to hold title to and administer the designated assets of the trustor for the use and advantage of the beneficiaries.
- The trustor, or ‘settlor,’ is the one who creates the trust and contributes property to it.
- The trustee is the person appointed by the trustor to manage the trust and its assets.
Often, in the case of living trusts, the trustor is also the trustee. But only the trustee(s), in carrying out the wishes of the trustor(s), may buy, sell or convey any interest in real property. In other words, the trustee(s) may only exercise the powers granted to them in the trust agreement.
In order to insure the title to a property that is part of a trust, a title company will require either actual excerpts from the trust or a Certification of Trust stating the following:
- The date the trust was executed
- The identity of the trustor(s) and the trustee(s)
- The powers of the trustee(s)
- The identity of the person(s) having power to revoke the trust, if any
- Signature authority of the trustee(s)
- The manner in which title to the trust assets should be taken
- A legal description of any interest in the property held by the trust
- A statement that the trust has not been revoked, modified, or amended in any way that would cause the Certification to be incorrect, and that the Certification is being signed by all the trust’s current trustees under penalties of perjury
Here are the answers to some frequently asked questions:
Q: Who can be a trustee in California?
A: Any individual not under a legal disability, or a corporate entity qualified to do trust business in California.
Q: If there is more than one trustee, can just one sign on behalf of the trust?
A: Perhaps. The trust must specifically identify all parties necessary to sign.
Q: Can the trustee give someone power of attorney?
A: Only if the trust provides for the appointment of an attorney-in-fact.
Q: What if all the trustees have died or are unwilling to act?
A: The trust usually appoints successor trustees, but if not, the court may do so.
Q: Are there any limitations on what a trustee may do?
A: Yes. The trustee is limited by the provisions of the trust, and must only act within the terms of the trust.
Additionally, the Probate Code contains general powers which, unless limited by the trust agreement, are sufficient for title insurers to rely upon for the purposes of sale, conveyance, and/or refinance.
Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.