Castle Estate Planning: Transfers of Real Property to Trusts
Transfers of Real Property to Trusts
Under common law real property could not be titled in the name of a trust. The practice was for the real property to be titled in the name of the trustee i.e Bob as trustee of the Smith Trust. Currently in Colorado real property can be titled in the name of a trust under Colorado Revised Statute Section 38-30-108.5.
Section 38-30-108.5. Conveyances to trusts--ownership and transfer of property
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A trust may acquire, convey, encumber, lease, or otherwise deal with any interest in real or personal property in the name of the trust.
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In order to evidence the existence of a trust and the authority of one or more trustees to act on behalf of the trust with respect to an interest in real property held in the name of the trust, any trustee of the trust may execute and record with the county clerk and recorder of the county in which the real property is located, a statement of authority pursuant to section 38-30- 172(2).
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The provisions of subsection (1) of this section shall also apply to any interest in real or personal property that is already in the name of the trust as of August 8, 2001. Nothing in this section shall be construed to be the exclusive manner in which title to an interest in real or personal property may be held by or on behalf of a trust, and title to an interest in real or personal property may be held by or on behalf of a trust in any other manner permitted by law.
This statute effective as of August 8, 2001, explicitly permits a trust in part (1) to own property, either real or personal, in the name of the trust. There is no requirement that a Statement of Authority or a trust affidavit be recorded prior to the titling of the property in the name of the trust. A trust can now own property in the name of the trust alone without any other requirements.
Furthermore, the statute provides a means for a trustee of a trust to show they have the authority to deal with the real property and the actual existence of the trust. Part (2) of CRS Section 38-30-108.5 permits any trustee of the trust to file a Statement of Authority complying with CRS Section 38-30-172(2) showing the existence of the trust and their authority to act on behalf of the trust.
CRS Section 38-30-172 is prima facie evidence of an entity exist that executed a recorded instrument
and that one or more persons, the trustee or trustees, have the authority to act on behalf of that entity. CRS Section 38-30-172(1).
As detailed in the statute a Statement of Authority need not be overly complex. The following sample Statement of Authority should comply with the statute. After executing the Statement of Authority it must be recorded in the County within which the property lies.
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Statement of Authority
The undersigned, [John Doe], as Trustee of the [John Doe Irrevocable Family Trust] dated [December 12, 2006], for the purposes of describing his representative capacity as grantee of any real property, hereby states as follows:
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The name of the entity on behalf of which the undersigned is acting is the [John Doe Irrevocable Family Trust] dated [December 12, 2006], as amended (hereinafter "Trust").
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The Trust is a Colorado trust and it shall be construed according to and be governed by the laws of the State of Colorado.
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The mailing address for the Trust is:[9555 West Main Street, Big City, Colorado 88000]
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The name and title of the person authorized to execute instruments conveying, encumbering, or otherwise affecting title to real property on behalf of the Trust is: [John Doe], Trustee
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This Statement of Authority is executed and recorded pursuant to the provisions of Section 38-30-172, C.R.S.
Signed this __ day of ________, 20_____. [John Doe], Trustee
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
Subscribed and sworn to before me by [John Doe] this ____ day of ________, 20_____.
Witness my hand and seal. My commission expires: ___________ Notary Public
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Conclusion
A trust in Colorado may own real property without the existence of any other filing or document other than the trust formation documents. However, the ability of a trustee to act on behalf of the trust regarding the real property as well as the existence of the trust can be prima facially established by the recording of a Statement of Authority.
By: Bruce Alan Danford, LLM 2/20/07