Overview
A trust is a legal arrangement in which a trustee holds title to and manages assets on behalf of beneficiaries. Importantly, a trust cannot own real estate without a trustee, nor can it act independently. The trustee is the legal owner of the trust assets and is responsible for managing them in accordance with the trust document and applicable Law.
Key Principles
- Trusts do not hold titles as entities. Instead, the trustee holds legal title, while beneficiaries have equitable title.
- Legal title gives the trustee control of rights and obligations to comply with the Law.
- Equitable title gives beneficiaries the right to enjoy future benefits from the property as assets are distributed.
- The trustee’s fiduciary duty requires acting in the best interests of beneficiaries and following the trust terms.
- The trust document explicitly defines the trustee’s powers, responsibilities, and limitations, ensuring legal clarity and proper management.
Unlike corporations, a trust is not a separate legal entity. It is a contractual agreement between the trustee and the beneficiaries, making it essential to name a successor trustee to prevent delays in the management or transfer of assets.
Because trust Law is complex, consulting a qualified attorney is strongly recommended to ensure compliance, proper administration, and protection for all involved parties. This article provides a general roadmap for communication with legal counsel.
I have also provided a more technical article if you prefer.
Required Documents to Continue a Loan if the Trustor/Trustee Passes Away
When a trustee who also served as the Trustor dies, lenders typically require the following documents to proceed with a loan or maintain an existing one:
· Affidavit of Death
· Death Certificate
· Copy of the Complete Trust Document
· Consent of the Beneficiaries
These documents confirm authority and continuity, allowing the lender to verify who now has legal power to act on behalf of the trust.