It is increasingly common to find that land is held in a family trust. As a strategy this holds many benefits (particularly those related to assets testing and taxation). However, if you are involved in such a situation it is critical that you understand the importance of having yourself, as a trustee, registered.
When land is held in a trust, the trust itself cannot be registered as the legal owner. It follows then, that the trustee must be registered in order that that a ‘real’ person or company can act should a need arise. In many of the transactions that we see, particularly the older ones, the trustee was an individual. This was traditionally the family patriarch as established at some point by an accountant. In these situations it is quite common for years to pass without any issue. Quite simply, there are no issues with the land until, as the patriarch gets older, he or she is advised to effect a ‘trustee resignation’ whereby he resigns from the role and one of the children takes over as trustee and perhaps even appointer. Thus, the trust continues to operate again for many years without any issue related to the land and its registration. Even following the death of the patriarch the trust is able to operate effectively without issue. However, and this may occur many years later, a decision to sell the land is made. A real estate agent is employed and the property is advertised for sale until a sale agreement is made with a purchaser.
It is not until settlement day when the Lands Title Office is asked to transfer the land that they are provided with the Trust Deed and the various amendments identifying the transition from the patriarch to the child, and the sale.
However, where the trustee has died, the Land Title Office will not recognise the change of trustee which takes place pursuant to the deceased’s Will. In fact, as far as the Lands Title Office is concerned, the only person who has the rights to transfer the land is the registered proprietor (our patriarch). Of course, this authority can’t be given since he is dead.
What follows then, is what can only be described as a massive headache and lots of questions for which quantifiable answers are not easily obtained. How can the parcel of land be transferred? How long will it take to rectify? What are the costs involved with rectifying the problem? Are penalties involved and indeed who is qualified to fix it?
It is critical for trustees for which land is involved, to be aware of the importance of legally transferring registration upon the change of trustee. It also follows, that where there exists uncertainty with regards to whether this has been done legally, it is strongly advised that trustees speak with one of the skilled solicitors at Welden & Coluccio Lawyers in order to have all documentation reviewed. After all, there is nothing worse than discovering this oversight in the days before the sale of a property, a situation that will be as time-consuming as it is costly.