The deed of trust is a document provided by your original mortgage lender to secure its interest in your property by placing it into a trust. Because the deed of trust serves as evidence of debt, is cannot be transferred into another individual's name, such as a granddaughter. However, you can use a deed to transfer the property you own into a trust to which your granddaughter is the beneficiary of.
Deed of Trust
At your loan closing, you signed numerous documents. One of these was the deed of trust, if the property is in a state that utilizes them. Other states use mortgage documents. Because the lender uses the property purchased as collateral toward the loan, it holds interest in the property until the loan is paid in full. The deed of trust explains the details of the mortgage loan, such as repayment terms and penalties for delinquent payments. It also functions to place the property into a trust, where it remains until the loan is satisfied. If you default on the loan the trustees — who are generally attorneys approved by the state — proceed with the foreclosure process on behalf of the lender. Deeds of trust are filed on public record with the county recorder after they are signed.
Sometimes a deed of trust is confused for other types of property deeds, such as warranty deeds or quitclaim deeds. They are not one and the same and do not serve the same purpose. Warranty and quitclaim deeds function to complete the transfer of ownership of real property from one party to another. Generally, warranty deeds are used when properties are sold because they hold the grantor responsible for transferring a clear title. Quitclaim deeds are more commonly used for the transfer of a property as a gift, or to add another person such as a granddaughter or spouse to the title. Deeds will only transfer property ownership, not financial obligations to the mortgage company.
A trust can be established to hold real property, money and other valuable assets. Some people elect to establish a trust in order to provide for their heirs after they die. When a trust is not established, the estate of the deceased will be distributed as determined by the will, if applicable. However, estates are subject to taxes. Property in a trust is not subject to taxes for the named beneficiaries of the trust.
When you set up a trust, you are known as the settlor. You name someone to be responsible to manage the trust on your behalf after you pass on, and that person is called the trustee. If a living trust is used, you can act as the trustee as well. Then, there are the beneficiaries. These people, or this person, will receive the property and other items in the trust at the defined time. Once your trust is established, you can sign a deed — usually a quitclaim — placing your property into the trust. Then you can declare your granddaughter to be the beneficiary. The property can be transferred to her upon your death, or you can specify that she receives it at a certain age.