Q: As a real estate agent for 34 years, I'm not a fan of trusts, so I'm disappointed in your recent response to a question about selling a property inside a trust.

A home held in a trust is not that easy to sell, nor does a trust make it easy for heirs to cash the check after a closing or settlement. A life estate deed is by far the easiest way to go. The property is controlled by the owners during their life. They can sell or do whatever they choose.

Immediately after their passing, the property automatically goes to the person or people listed in the life estate deed. A deed also trumps a will (I know this from personal experience).

I don't claim to be an attorney or give legal advice, but I just know with my experience as both an heir and an agent I'd much prefer the life estate deed anytime.

A: We’re sorry to disappoint you. We’ve never found any issues or problems with sellers using trusts to sell their homes. Once the property is in a trust, most settlement agents and title companies need only to verify the person signing on behalf of the trust is authorized to sign.

Most frequently, the person signing is the person who set up the trust. He or she will have a copy of the trust and, as the trustee and beneficiary under the trust, shouldn’t have any problems conveying ownership to a buyer.

If the trustee/beneficiary has died, the trust document should name a successor trustee. If the successor trustee has a copy of the trust, there shouldn’t be any issues selling the property to a subsequent buyer.

We're not sure what problems you've seen. But who exactly gets the proceeds from the sale could cause an issue at times.

With the amount of real estate transaction fraud growing, title companies and settlement agents generally prefer to issue the proceeds check from the sale of a property directly to the owner. In the case of a trust, the owner is the trust, and the title company or settlement agent may request the proceeds check be made payable in the name of the trust.

Some settlement agents and title companies will allow the trustee to direct them to issue proceeds checks to a different person or people. In circumstances where the check is made payable to the trust, we can understand how that could cause a problem for the seller.

With advance planning, and working with the settlement agent or title company, you can solve that issue without causing problems at settlement or closing. Most likely, you’ll need to direct the settlement agent well in advance of the settlement, letting them know the name of the person who should be on the proceeds check from the sale. Usually, the proceeds check is made out to the successor trustee or successor beneficiary. With a copy of the trust agreement and other documentation for the closing, the settlement agent should respect the direction to disburse funds to the successor trustee or beneficiary, as may be requested.

We understand you think a life estate is better and easier, and we can respect that choice. However, once the owner of the property conveys her interest to someone and keeps a life estate, she loses the flexibility to sell the property or make changes.

You mentioned the life estate owner can still sell the property, but that is incorrect. She would be able to sell only if the fee owner (the person who is the underlying owner of the property exclusive of the life interest granted) agreed to the sale, as she has a life estate that gives her the right to use the home only during her lifetime, but she is not the actual owner of the property.

We’ve seen things change due to circumstances beyond anyone’s control. The wishes a person has on day one may differ a year later, and if the owner decides they want or need money from the property, they no longer can use the property as they have only a life estate, and the true owner is someone else. If the owner marries and wants the spouse to live in the property after her death, that may occur with a life estate as her interest ends when she dies.

Trusts are just one way of dealing with properties, and if you prefer the life estate method, you're free to tell people to use it. But we would have to advise them of the many pitfalls that may come up when using a life estate.

You should also know that the terms of the trust are not controlled by the last will and testament of that person. In fact, one of the primary reasons to use a trust is to avoid probate and issues relating to a will.

Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.

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