A trust is a legal arrangement where one party (the trustor, grantor, or settlor) transfers ownership of property to another party (the trustee) to hold and manage for the benefit of a third party (the beneficiary). In real estate, trusts are widely used for estate planning, privacy, asset protection, probate avoidance, and investment management. Understanding trusts is important because they affect how title is held, how property is transferred, and what documentation is needed at closing.
The most common types of trusts in real estate include: revocable living trusts (the most popular for individual homeowners — allows the trustor to maintain control during their lifetime while avoiding probate at death), irrevocable trusts (cannot be easily modified once created — provides stronger asset protection and potential tax benefits), land trusts (holds title to real property primarily for privacy — the trust name appears on public records instead of the owner's name), and real estate investment trusts (REITs — entities that own and operate income-producing real estate).
When property is held in a trust, the trustee — not the individual beneficiary — appears on the deed and other public records. For example, a deed might read: "John Smith, as Trustee of the Smith Family Trust dated January 15, 2020." The beneficiary (who may also be John Smith) enjoys the benefits of ownership but does not appear in the public records. This separation of legal title (trustee) and beneficial interest (beneficiary) is the fundamental feature of trust ownership.
At closing, transactions involving trusts require additional documentation: a copy of the trust agreement (or a certification of trust) to verify the trustee's authority, confirmation that the trust has not been revoked or amended in ways that affect the transaction, and verification that the trustee is acting within the scope of their powers. Lenders may have specific trust requirements for mortgage transactions — some lenders will not lend to irrevocable trusts, for example.
At Beycome Title, we handle trust transactions regularly and understand the specific documentation requirements for different trust types in Florida and Texas. Our title team reviews trust documents carefully to ensure the trustee has proper authority and that the closing complies with the trust's terms. Get your free title quote.