Selling a house held in a living trust in Maryland: who signs, what the title company wants, and what changes after the grantor dies

Estate planning attorneys in Maryland have been putting houses into revocable living trusts for forty years, mostly to keep the house out of the Register of Wills after the owner dies. The plan works when the paperwork was finished. When it is time to sell, a trust house closes like any other house with one change: the trustee signs, not the owner. The questions differ depending on whether the person who created the trust is still alive. This article covers both.

The trustee has the power to sell, and the trust document says how

Maryland rewrote its trust law in 2015 with the Maryland Trust Act, Title 14.5 of the Estates and Trusts Article. A trustee holds legal title to the house and has the power to sell it, sign the contract, deliver the deed and receive the proceeds without asking a court, unless the trust document itself takes that power away or requires a beneficiary’s consent. Read the document before you list. Most trusts written for a married couple name both spouses as co-trustees and let either act alone. Some require both signatures, and the title company enforces whatever the document says.

You do not have to hand the buyer the whole trust. Section 14.5-910 of the Trust Act lets the trustee sign a certification of trust instead, a short sworn statement that names the trust, the date it was signed, the current trustee, the trustee’s powers and the fact that the trust has not been revoked. Title companies in Maryland accept it routinely and it keeps the list of beneficiaries and the distribution scheme private.

The deed mistake that sends a trust house to probate anyway

The failure we see most often is simple. The attorney drafted the trust, the owner signed it, and the deed conveying the house from the owner to the trustee was never recorded in the county land records. The trust exists, the house is not in it. If the owner is alive, the fix is a new deed from the owner to the trust, recorded before the sale, or you skip the trust entirely and sell in the owner’s own name. If the owner has died, there is no shortcut. The house is a probate asset, the personal representative sells it, and the timeline is the one in our probate article. Pull the current deed from the land records or the SDAT real property search before you do anything else. The grantee line should read the trustee’s name followed by the name and date of the trust.

What the title company asks for

Expect a request for the recorded deed into the trust, the certification of trust or the full document, and a photo ID for each trustee who signs. If the grantor has died, add the death certificate, a written acceptance from the successor trustee, and a tax identification number for the trust, because a revocable trust that used the grantor’s Social Security number while they were alive becomes a separate taxpayer at death. The mortgage, if any, is paid off from the proceeds like any other sale. Moving a house into a revocable trust did not trigger the lender’s due on sale clause, because federal law under the Garn St Germain Act protects transfers into a living trust where the borrower stays a beneficiary and keeps living there, so there is no catch up payment hiding in the payoff. The sale itself carries the ordinary Maryland transfer and recordation taxes listed on our county tax table, and the seller side of closing looks like the numbers in our closing costs article.

Taxes while the grantor is alive

A revocable living trust is invisible to the IRS while the person who created it is living. It is a grantor trust, the sale goes on the grantor’s own return, and the primary residence exclusion applies exactly as if the house were titled in their name, provided they owned and lived in it for two of the last five years. Our capital gains answer covers the exclusion amounts and the Maryland nonresident withholding that applies if the grantor has already moved out of state.

What changes after the grantor dies

At death the trust becomes irrevocable and the successor trustee takes over. No estate needs to be opened for the house, which is the whole point of the trust, and the trustee can list it or sell it to us as soon as the death certificate is in hand. Three tax points matter. First, the house gets a stepped up basis to its fair market value on the date of death, so a sale within a few months usually shows little or no capital gain. Get an appraisal or a broker opinion as of the date of death and keep it. Second, Maryland inheritance tax still reaches trust assets even though they skip probate. Spouses, children, grandchildren, parents, siblings and a few other close relatives are exempt. Anyone else, a niece, a friend, an unmarried partner, owes ten percent of what they receive, and the Register of Wills collects it through an information report the trustee files on the non probate assets. Third, the Maryland estate tax does not start until the whole estate, trust included, passes five million dollars, so it does not touch most trust houses.

Disclosure when the trustee never lived there

Maryland’s Section 10-702 property condition disclosure does not apply to a transfer by a fiduciary in the course of administering a trust, which covers a successor trustee selling a parent’s house they never lived in. The federal lead paint disclosure for any house built before 1978 still applies and the trustee signs it, stating what they know. Our lead paint article covers that form. A trustee who is also the grantor and has lived in the house for decades should expect to complete the state form or the as-is disclaimer the same as any owner.

When the beneficiaries do not agree

The trustee decides whether and when to sell. Beneficiaries are owed information and fair dealing, not a vote, unless the document gives them one. A sibling who wants to keep the house can buy it from the trust at a supported value, and a trustee who sells to a family member below market without the other beneficiaries’ written consent is inviting a lawsuit. If the document names two co-trustees and they cannot agree on anything, the Circuit Court can remove one or instruct both, and that road looks a lot like the one in our co-owned house article.

Selling a trust house to us

Send us the address and the page of the trust that names the trustee. We look at the house in person or on video and send a written offer within a day. The contract names the trust as seller and the trustee signs it. A licensed Maryland title company handles settlement, pulls the deed history, and tells you exactly which of the documents above it needs. Two to three weeks is typical when the deed into the trust was recorded and the trustee has the death certificate. Proceeds are wired to the trust’s account, and the trustee distributes them under the document. Our as-is page covers what we do and do not ask you to clear out, which is nothing.

A living trust does what it was built to do when the deed was recorded and the successor trustee has the document in hand. Check the deed first, gather the certification and the death certificate, and the sale runs on the trustee’s signature alone. If the deed was never recorded, know that early, because the probate clock starts the day you file, not the day you find out.