CREATING MERGER

Federal Bankruptcy Court in Jacksonville says that if you are the Trustee of a Trust that you are also the Beneficiary of, it’s like you never had a Trust.  They call that a Merger of Title.  If that’s the case, why do a Trust?  Especially when it’s your Homestead Property where there’s judgment and probate protection.   Why would you spend your precious money on a Trust when there’s no benefit?

With a Trust, the Trustee owns the property and has fiduciary responsibility to the Beneficiaries.  Meanwhile, the Beneficiaries can maneuver behind the scenes, invisible to the public eye.  This actually is the way a Trust should work.  A Trustee holds title for the Trust and the Beneficiaries own the Trust.  The Trustee and the Beneficiary should not be one and the same people.   

There are a lot of reasons for a Trust—make sure you speak to a competent attorney before doing one.  There are a few reasons an attorney would want you to do a Trust.  If the reason is so that the attorney can make his yacht payment, I would suggest that you not do a Trust.  I unfortunately believe yacht payments to be the primary reason that attorneys encourage Trusts.  It’s just my opinion that you do not need a Trust for everything, especially on Homestead Property.  

I have Trust issues when it comes to real estate Trusts.  The Beneficiaries can change by transferring their beneficial interest from one to another keeping the true owner private—which means you can’t see it in a Title Search.  

When buying property from a Trust, how do you know if the Trustee is acting under the direction of the Beneficiary?  Yeah, we do it by affidavit, but that’s self-serving.  You think we really know who the Trustees are?  We don’t, and the Trustee doesn’t have to tell us.  Even if I look at the Trust, that doesn’t mean that the beneficial interest hasn’t changed.  What if the Trustee didn’t act on permission of the Beneficiary when he sold you that house?  

There’s 1001 reasons to have Title Insurance because there’s a million and one risks out there.  Okay, so maybe there’s a million and one reasons to have Title Insurance.  This is just one more example.  The issue is not always about who’s right or wrong—it’s about how much money it will cost to prove you own the property.  And it stinks when you’re proved wrong.  Believe me, I would have loved to have used a lot of other words—these aren’t fairy tales, these are real stories.  

Putting Homestead Property into a Trust drives me crazy because it serves no purpose, especially when the Trustee and the Beneficiary are one and the same, and it’s a waste of money.  Don’t spend money where you don’t have to—don’t create a Merger of Title by taking title as Trustee of your own Trust.  I promise there’s a lot of other ways an attorney can make an income—don’t let them sucker you into a worthless Trust.  

Buy Title Insurance instead of trying to pay for a lawsuit.