How Do You Sell a House Held in a Living Trust After Death in New Jersey?

When a house was deeded into a living trust, the trustee named in the trust sells it under the trust's terms, without Letters from the Surrogate. The trustee proves their authority with a certification of trust under New Jersey's trust code, and the estate's attorney still checks whether the Division of Taxation's waiver is needed before closing.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living. A trust sale in Monmouth or Ocean County runs a lot like any estate sale on the house side, with a different person holding the pen. Here's how it works.

Who sells a house that's in a living trust?

The trustee who's currently acting, usually the successor trustee named in the trust after the person who created it dies. New Jersey's Uniform Trust Code, enacted as P.L.2015, c.276, says a trustee may exercise the powers the trust's terms give them and, unless the terms limit them, all the powers over trust property that an unmarried competent owner has over their own property (N.J.S.A. 3B:31-69). Those powers are subject to the trustee's fiduciary duties.

New Jersey's fiduciary powers statute also lists the power to sell property at public or private sale on the terms most advantageous to those interested in it, and it applies to every fiduciary, trustees included, unless the trust or a court order says otherwise (N.J.S.A. 3B:14-23).

Does a house in a trust go through probate?

Not if the trust actually owns it. The Monmouth County Surrogate says a will is probated when the person who died had assets in their name only. A house deeded to the trust isn't in their name.

The catch is the deed. Some people sign a trust and never deed the house into it. If the deed still shows the person's own name, the house may be probate property after all, so the first step is a copy of the deed for the estate's attorney. My article on whether a house has to go through probate covers the other ways a house can be held.

How does a trustee prove they can sell?

With a certification of trust. Under N.J.S.A. 3B:31-81, instead of handing over the whole trust document, the trustee can give a buyer, lender or title company a certification that states:

• that the trust exists and the date it was signed;
• who created it;
• who the acting trustee is, with their address;
• the trustee's powers;
• whether the trust is revocable, and who holds any power to revoke it;
• whether co-trustees must all sign, or fewer than all; and
• the name in which title to trust property is held.

Every acting trustee signs it, and it states that the trust hasn't been revoked or changed in a way that makes the certification wrong. It doesn't have to show who inherits. The recipient can ask for copies of the parts of the trust that name the trustee and give the power to act in this sale, and someone who relies on the certification in good faith is protected.

On a closing, that usually means the title company reviews the certification and those excerpts early. Getting them to the title company early saves time at the end.

Does the trust still need the New Jersey inheritance tax waiver?

Ask the estate's attorney. Avoiding probate isn't the same as avoiding the Division of Taxation. The Division's Guide to Being an Executor says real estate transfers always require its Form 0-1 waiver, and its Form L-9 instructions ask for copies of any trust agreements and say the Division may require a full return when a trust's terms suggest possible inheritance tax. The attorney will decide which filing fits this trust and put it on the timeline. See who pays NJ inheritance tax on a house for the classes and rates.

What does the trustee have to do with the money?

Follow the trust. The trust code says that when an event ends the trust, the trustee distributes the trust property to the people entitled to it without delay, and may keep a reasonable reserve for debts, expenses and taxes (N.J.S.A. 3B:31-70). The trustee may also send beneficiaries a proposed distribution, and a beneficiary whose written objection doesn't reach the trustee within 30 days after the proposal is mailed or delivered loses the right to object to the kind or value of the assets in it.

Those are trust-administration steps for the trustee and the attorney. My part is the house: getting the most for it and keeping every beneficiary informed along the way.

How do you sell a trust-owned house in Monmouth or Ocean County?

1. Confirm the deed and the trustee. The attorney checks that the trust holds title and who's acting as trustee. If co-trustees must sign together, plan for every signature.
2. Value the house. Start with my home value tool, then let me walk it. I spent years building and remodeling New Jersey homes, so you get a construction-level read on what's worth fixing.
3. Empty and prepare it. I can line up the estate sale, the clean-out and the trades, once the trustee confirms what happens to the contents.
4. Get the title paperwork in early. Certification of trust, excerpts and any waiver the attorney says is needed.
5. Market it right. Photos, video and a launch built around the first two weeks, because that's when a house gets its best attention.
6. Keep the beneficiaries informed. The trustee and every beneficiary get the same written update at each milestone.

The Estate & Probate Guide walks through the whole sale, and you can see how I handle estate and trust homes.

Frequently Asked Questions

Can a successor trustee sell a house without court approval in New Jersey?

The trust code lets a trustee exercise the trust's powers without court authorization, subject to the trust's terms, other statutes and fiduciary duties. The attorney confirms what this trust allows.

Do the beneficiaries have to sign the listing or the deed?

The trustee signs. Whether anyone else must agree depends on the trust's terms, so ask the attorney.

Will the title company need the whole trust?

Usually a certification of trust and the excerpts that name the trustee and give the power to sell are enough under N.J.S.A. 3B:31-81. The title company decides what it needs for this closing.

Are taxes different when a trust sells the house?

That's a question for the estate's accountant. IRS Publication 551 covers the basis of inherited property and property received from a trust.

This is general information, not legal, tax or lending advice. The trustee should work with the trust's attorney and a tax professional.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• How to sell an inherited house in New Jersey
• What happens at an estate closing, and when heirs get paid
• The Estate & Probate Guide
• Have a question this didn't answer? Send it to Dennis Mark.