San Antonio Express-News
October 21, 2003

Living Trust and Quitclaim Deed

copyright 2003, Paul Premack

When a married couple in Texas creates a living trust, and they own a home as their community property, their immediate next step should be to convey the home to the trust. This means that both spouses should sign a deed that transfers ownership to the trust, and record the deed with their county clerk.

I’ve looked at a variety of "trust packages" that clients have purchased elsewhere. They often run into trouble because of the shoddy or incorrect documents. If your trust package is like others I’ve seen, the document it included as a deed may have had working called a "quit claim."

Unfortunately, a quitclaim is not a very good way to convey your home into your trust. Essentially, a quitclaim states that you give up whatever interest you may own, but does not make an affirmative representation that you every actually had an interest. You can walk away from something that you don’t own, and a quitclaim makes no promises to any future owner that what they are getting is valid.

Instead of a quitclaim, the home should be conveyed with a general warranty deed. In it, you (as owners) represent that you have good title to the property, and that you promise to defend the buyer against any future claim to the contrary.

If a transfer to the trust was done with a general warranty deed, the trustee has "legal title" to the house (though the spouses retain the use and enjoyment of the house). As such, when one spouse later dies, there is no additional process to transfer the house – it simply continues to be the property of the trust, available for the surviving spouse’s use and enjoyment. And the trustee (who, like in your case, is usually the surviving spouse) can sell the property without probate.

On the other hand, a quitclaim never affirmatively transfers the house to the trustee. When you try to sell it, your buyer cannot rely on the word of the trustee because the deed didn’t say the right things. Thus, you and your husband, not the trust, are still considered to be the owners of the house, even though you were misled to believe otherwise. Since he owned a ½ interest in the house but is now deceased, the only way to transfer his part of the house to yourself (and then to the trust using the correct general warranty deed) is to probate your husband’s Will. Talk to an experienced probate or elder law attorney about probate, which is not necessarily complex or difficult.

I’ll say it once again: stay away from the trust salespeople. They are not licensed attorneys. They cannot give legal advice (and often emphatically say they are not giving legal advice while they are giving legal advice). Deal directly with a local attorney and the outcome should be more to your liking. The cost is not much different but the value is much higher.