Trust sales are becoming more common for estate planning, privacy and tax planning purposes because, among other things, a transfer of property through a trust does not usually trigger the probate code (as with a traditional sale) and causes less headaches regarding title.The global housing market in 2025 Real Estate is looking more balanced than some might expect, with supply and demand and increased interest from buyers and sellers in sustainable homes that provide cost savings over the longer term.Selling a house is tough enough under ordinary circumstances, but this is far from the case with property held in trust, because there are usually more legal considerations on top of financial ones. How to Sell a House in a Trust. Whether you’re the trustee handling the estate or have questions regarding your rights, knowing how to sell a house in a trust is crucial for compliance, fairness, and an easy transaction.
This guide explains what a trust is, its impact on property ownership, and the main steps involved in selling a house held in trust. It will also outline the legal requirements you’ll face, including potential complications, and discuss the tax implications from a broader perspective.
How Trusts Affect Real Estate Ownership and Sales
A trust is a legal structure that permits one party, the trustee, to hold and manage property on behalf of another, known as the beneficiary. The one who establishes the trust, called a grantor or settlor, dictates how the property is to be handled-traded or sold.
Estate planning utilizes trusts, which allow individuals to handle how their property is transferred after death without going through the probate process. In other words, when you put your home in a trust, legally you no longer own it. That means selling it would be subject to the trust’s terms and any relevant state laws.
Types of Trusts: Revocable and Irrevocable
Two types of trusts can affect whether and how a property can be sold:
Revocable Trusts
A revocable living trust allows the grantor to retain control over the property during their lifetime. Moreover, they can amend, revoke, or disband the trust at any time. Selling a house you own in a revocable trust is fairly simple, because as the grantor (and likely also the trustee), you have ultimate authority over your property.
For example, if a homeowner puts their Long Island house in a revocable trust for estate planning purposes but then decides to move, they can sell the home as though it were any other piece of property. The sale proceeds then return to the trust (or the grantor, if that’s how the trust is structured).
Irrevocable Trusts
The irrevocable trust, in contrast, places complete control and ownership in the hands of the irrevocable trust itself. Once set up, it can not be changed without the agreement of all beneficiaries or a court order. More people are involved in selling property held by an irrevocable trust, because the trustee has to see to it that the sale complies with the terms of the trust and all beneficiaries will benefit.
Here, the sale proceeds generally remain within the trust and are distributed according to the terms provided by the trust.
Legal Issues: The Powers of a Trustee and Rights of Beneficiaries
The trustee plays a key role in the management and sale of trust real property. They have responsibilities to act in the best interests of the trust beneficiaries. They are required to adhere to state laws and follow the provisions required in the trust declaration.
Commencing with a sale, the trustee must:
- Review the trust agreement to confirm that the trustee has the necessary authority to sell the property.
- Inform all of the beneficiaries of the intention to sell.
- Seek consent or the court’s sanction if necessary.
- Beneficiaries also have rights. They can demand financial records, object to a sale they think runs counter to the trust’s mission, or go to court if they suspect impropriety.
- Trustees must be careful in documenting all steps to guard against disputes or allegations of mishandling.
The Sales Process: Step-by-Step Guide
Selling a trust owned house involves both legal and real estate processes. Here’s an explanation of the way it generally goes:
Review the Trust Document
Verify if the trust permits a sale of the property and, if so, on what terms. If there are limitations, you may have cause to seek legal advice.
Determine the Trustee’s Authority
The trustee must authorize the sale of the property. The transaction may have to be approved by a co trustee or beneficiaries.
Obtain a Property Appraisal
By hiring an independent appraiser, one can establish fair market value, protecting both trustees and beneficiaries.
Prepare the Property for Sale
According to the terms of the trust, the trustee may make basic repairs, or the property can be sold “as is.” Cash buyers, such as 123 We Buy House, frequently purchase trust owned properties quickly, which is of particular interest if the objective of the trust is to dissolve it rapidly.
List or Market the Property
Trustees can choose to work with a real estate agent who specializes in trust sales or sell directly to an investor to bypass fees and save time.
Close the Sale and Disburse Funds
At closing, the sale proceeds are deposited to the trust. The trustee, after which disburses those funds as per the terms of the trust or for other estate uses.
Tax Consequences of Selling a House in a Trust
Tax is heavily involved in any real estate transaction, and trust-owned properties are no different. Knowing what the possible tax consequences are can prevent unexpected expenses and legal headaches.
Capital Gains Tax
There may be a capital gains tax if the property has increased in value from the time it was placed into the trust until it is sold.
The revocable trust is considered part of the grantor’s estate, and capital gains are reported on the grantor’s individual return.
Irrevocable trusts are treated as independent entities, which could result in higher tax rates for profits.
Step-Up in Basis
When a grantor dies and the property passes through a trust to an heir, the value of that home gets a “step-up.” That’s because the beneficiary pays capital gains only on the increase in value between the day of grantor’s death and the selling date and that could be a considerable saving.
Estate and Income Taxes
Depending on its structure and the timing of the sale, the trust may also be subject to estate or income taxes. Trustees should seek tax professional advice for compliance and to minimize their tax liability.
Conclusion:
When selling a home held in a trust, you must consider both legal obligations and tax implications, while also being mindful of the best interests of all parties involved. The key is being prepared knowing the terms of the trust, verifying that the trustee has the necessary authority to act, and obtaining professional advice before proceeding.
Trust held property owners and trustees looking for an efficient, easy-to-execute, compliant solution can sell their trust homes without the typical holdups or fees through experienced buyers like 123 We Buy House.
