Estate Planning 101

How to Transfer a Wraparound Trust Deed into a Trust

Learn the step-by-step process of transferring a wraparound trust deed into a trust with our detailed guide, ensuring that your real estate assets are securely managed and protected for the future.
February 4, 2024

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A wraparound trust deed, or wraparound mortgage, can be an advantageous tool when it comes to real estate financing. However, transferring it into a trust provides an additional layer of security, privacy, and potential tax benefits. This blog post aims to guide you through the steps to transfer a wraparound trust deed into a trust.

Understanding Wraparound Trust Deeds

A wraparound trust deed is a form of secondary financing for buying a property. The seller extends to the buyer an installment note which wraps around any existing notes. It allows the buyer to purchase a property without having to secure a traditional mortgage.

Why Transfer a Wraparound Trust Deed into a Trust?

Transferring a wraparound trust deed into a trust can provide important benefits. It can protect the property from potential creditors and legal judgments, maintain your privacy by keeping the property and your personal details off public records, and potentially provide estate and tax planning advantages.

Setting Up a Trust for a Wraparound Trust Deed

  1. Choose the type of trust: Decide whether a revocable or irrevocable trust is more suitable for your situation. A revocable trust can be changed or terminated by the trustor during his/her lifetime, while an irrevocable trust, once established, cannot be altered without the permission of the trustee.
  2. Select a trustee: This individual will be responsible for managing the trust and its assets.
  3. Create the trust document: This legal document outlines the terms of the trust, including the identities of the beneficiaries and the trustee, as well as instructions for managing the trust assets.
  4. Fund the trust: Transfer your assets – in this case, the wraparound trust deed – into the trust.

Transferring a Wraparound Trust Deed into a Trust

  1. Prepare the documents: Make sure you have all the necessary paperwork for the wraparound trust deed and the trust.
  2. Sign the deed: Sign the deed in the presence of a notary public, who will also sign and stamp the deed.
  3. Record the deed: File the deed with the county recorder's office where the property is located. The deed will be returned to you after it is recorded.
  4. Document the transfer: Keep a detailed record of the transfer for future reference.

Seeking Professional Assistance

Transferring a wraparound trust deed into a trust can be a complex process with potential legal and tax implications. Thus, it is highly recommended to consult with a real estate attorney or financial advisor to navigate the process correctly. They can provide guidance, help you understand the implications of the transfer, and ensure that your interests are protected.

Conclusion

With careful planning and professional assistance, transferring a wraparound trust deed into a trust can offer significant benefits. It is a strategic move that can provide financial security and peace of mind for the future.