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Danger Ahead: Transferring Real Estate into a Trust

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Trusts which will own real estate are typically formed as part of an estate plan or in connection with asset protection planning. The primary purpose of placing real estate into a trust as part of an estate plan is to avoid the need to open a probate upon the death of the original owner. As part of asset protection planning, trusts can be an effective tool to prevent creditors from seizing the real estate to pay judgments or claims. In transferring real estate into a trust, it is important to ensure that the trustee and trust name are properly described.

Transferring real estate into a trust in Washington state requires proper identification of the trust. In Washington, the trust itself does not actually hold title to real estate. Instead, the trustee holds the title and every trust must name a trustee. The trustee can be either a person or an entity (such as a corporation or limited liability company). As an example, assume that John Smith owns a home at 123 Main Street. He consults with an experienced estate planning attorney and wishes to place ownership of the home in the “John Smith Revocable Living Trust dated July 1, 2015.” John Smith is the trustee and his daughter is the beneficiary. In order to correctly transfer title to the John Smith Revocable Living Trust, he will need to sign a deed that transfers title to the home to “John Smith, as Trustee of the John Smith Revocable Living Trust dated July 1, 2015.” If John Smith transfers title to “John Smith Revocable Living Trust dated July 1, 2015,” then the transfer is not effective.

It is very important that the correct name of the trust is used when transferring real estate into a trust. Consult with an experienced estate planning or real estate attorney when transferring real estate into a trust to ensure that the transfer is completed correctly.