Trust Ownership of a Unit
Question: How does a trust effect the ownership of a unit? Who represents the unit when
- the trust has not yet been settled and
- there are multiple heirs?
First, not all trust agreements are the same. There are land trusts, which are vehicles used by owners to keep their personal interest in the property private. In a typical land trust, all of the rights, powers and duties associated with ownership of the property remain in the hands of the beneficiary or beneficiaries of the trust, which includes all obligations and rights set forth in an association’s governing documents.
The other, more familiar trust arrangements are living (“inter vivos”) trusts and testamentary trusts. A living trust is executed and of legal effect during the life of the individual that settles or establishes the trust agreement. A testamentary trust is a document created during the settlor’s (maker’s) life, but that is of no legal effect until that person dies. It is important to understand that there is no single rule concerning trust agreements and control of trust property. Each trust is distinct and must be taken on an individual basis. However, generally speaking, with a living or testamentary trust, the trustee is vested with the authority to deal with all aspects of the trust, including the assets that make up the trust. Accordingly, the trustee, as the individual charged with the legal obligation to deal with and make decisions concerning the trust and any trust assets, would be in the position to advise the association who will be casting votes on behalf of the unit, etc. However, until a trust agreement is “settled” or executed, it is of no effect. The trust only becomes the owner of records for the unit and only has the authority to act on behalf of trust beneficiaries upon execution of the trust document by the settlor or maker of the trust.