I’m Transferring Trust Property. Do I Have to Provide Disclosure?

Understanding the Seller’s Disclosure Form

Image of the word Transparency as if it was written on a whiteboard. The is a hand holding a marker made to appear like it has written the word.

If you buy a property from a trust, are you less protected by disclosure rules? If you’re transferring a deed to trust property, what do you need to know for proper disclosure?

There is no one-size-fits-all answer. Disclosure of defects in real estate is a question of state law. But don’t assume that buying from a trust means buyer-beware. The states’ trust exceptions to disclosure laws tend to be narrow.

Here, we take a look at two examples, to give parties to a trust transaction an idea of the issues to spot before the deed changes hands.

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Should a House Be in an Irrevocable Trust?

Image of a side of a house from the ground looking up. Captioned: Should a House Be in an Irrevocable Trust?

A home can go into an irrevocable trust. But giving up control over a primary residence is not something most owners want to do. The owner lets go of the “incidents of ownership” and the house goes under a separate tax ID, with taxes filed by a trustee. The owner might continue living in the home, but the house essentially becomes a vessel to hold property for the named beneficiaries.

Any homeowner’s financial circumstances and goals can change, and so can their relationships with potential beneficiaries: family, friends, and charities. This is why an irrevocable trust makes sense only in rare situations.

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