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Understanding The Role of Trustee in Selling a House

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Living trusts often confuse people unfamiliar with estate planning. Basically, you create a trust and then transfer title to certain property from yourself to the trustee. The confusing part is that you can also serve as the trustee, at least while you are still alive. And as trustee, you can still use or sell the property without restriction.

But the critical thing to understand is that while the property remains in trust, you must take any action as the trustee and not as an individual. For instance, let’s say you create a living trust and transfer your house into it. If you then decide to sell the house, you need to make sure you sign the deed and any accompanying paperwork as the trustee, e.g., “John Smith, as Trustee of the John Smith Revocable Trust.”

Mistake in Deed Leads to Adverse Possession Lawsuit

What happens if you make a mistake and sign the deed as an individual? For one thing, the person who thought they know owned the house may need to jump through a number of legal hoops to establish title. This actually came up in a recent case from the Florida Second District Court of Appeal, Batterbee v. Roderick.

In this case, a woman (the settlor) who owned a mobile home in Sebring created a trust. She transferred the home and its surrounding property into the trust. Some years later, the settlor invited his son and his then-girlfriend to live in the home. The son later married the girlfriend and they enjoyed “exclusive possession” of the property.

In 2009, the settlor signed a quitclaim deed that purportedly transferred the property to her son outright. Unfortunately, the deed did not identify the settlor as the trustee of the trust. This meant the deed was “legally ineffective.” But at the time, nobody had noticed the defect.

After the settlor died in 2011, her sister took over as trustee. In 2014, the son and his wife began divorce proceedings. They both claimed the home as a marital asset. This prompted the successor trustee to file a “corrective” deed purportedly transferring the property back into the trust. Despite this action, the divorce court treated the house as the property of the son and his now-former wife and awarded it to her in the final judgment.

When the former wife died, her interest in the property passed to one of her brothers. This prompted litigation between this brother and the successor trustee over who actually owned the property. The brother claimed his sister and her ex-husband had established “adverse possession” despite the original defective deed.

The Second District agreed. Reversing a trial court’s ruling in favor of the trustee, the Second District explained that under Florida law, when someone takes possession of real property under the good faith belief they hold a valid title and maintains “continued possession” for at least seven years, they effectively prove they are the lawful owned under adverse possession.

Here, the Second District said the adverse possession began when the settlor signed the original defective deed, which was more than seven years before the litigation began. The current owner therefore established his sister was the rightful owner of the property.

Speak with a Florida Trust Attorney Today

This litigation would never have been necessary if the settlor had properly executed the original deed in her capacity as trustee. While trusts are not complicated, they do require a certain amount of attention to detail. An experienced Fort Myers estate planning attorney can advise you of these details and help to keep your family out of court. Contact the Kuhn Law Firm, P.A., at 239-333-4529 today to schedule a free initial consultation with a member of our estate planning team.

Source:

2dca.org/content/download/535924/5952089/file/182037_39_08302019_08530790_i.pdf

https://www.kuhnlegal.com/orlando-judge-removes-professional-guardian-after-causing-death-of-ward/

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