Trustee’s acceptance of a deed in trust

Effective January 1, 2017, there is a new statute, 760 ILCS 5/6.5, which requires a written acceptance of a conveyance of real estate by the grantee/trustee. The statute reads as follows:

Sec. 6.5 Transfer of property to trust

(a) The transfer of real property to a trust requires a transfer of legal title to the trustee evidenced by a written instrument of conveyance and acceptance by the trustee.

(b) If the transferor is a trustee of the trust, an interest in real property does not become trust property unless the instrument of conveyance is recorded in the office of the recorder of the county in which the property is located.

I have received various comments from title companies, such as (1) never heard of this statute; (2) you can record without the acceptance; (3) you can record, if you have the acceptance; but you don’t need to attach it and instead keep it in your file; or (4) you should attach it and record with the deed.

I then reviewed the legislative history.

Legislative History

The legislative history includes a case, Estate of Mendelson v. Mendelson, 2016 IL App (2d) 150084, which is worth reading.

The facts showed that a 2005 joint tenancy deed was executed, but never recorded during the decedent’s life. This raised the question of whether delivery of the deed occurred.

Later, a 2006 deed was executed and recorded transferring the property to a 2006 trust, which was later revoked. In 2011, the decedent refinanced her mortgage and the loan documentation indicated that she was the sole owner of the property.

Finally, a new trust was executed in 2011, which referred to the joint tenancy deed and that the property shall “become the sole and exclusive property of my son, Michael Mendelson,” pursuant to the deed, However, the trust never gives the property to the son.

In affirming the trial court, the Appellate Court stated that:

On September 12, 2014, the trial court entered its ruling, determining that the decedent’s estate should be divided evenly among the four sons. The trial court explained that the 2005 deed did not validly transfer the property into joint tenancy, because the decedent did not intend to convey any present interest to Michael when she signed it. The trial court found that the 2006 trust was valid. The trial court further found that the estate had not presented sufficient evidence that Michael had exerted undue influence before or when the 2011 trust was made and executed. The trial court therefore determined that the 2011 trust was valid and that it effectively revoked the 2006 trust. However, because no deed was executed or recorded to transfer the Highland Park home into the 2011 trust, the 2011 trust did not include the Highland Park home. As the 2011 trust revoked the 2006 trust, and the 2006 deed was now funding a revoked trust, the trial court found that the Highland Park home reverted to the decedent’s probate estate (which would be divided equally among the four sons according to the laws of intestacy).”

There was also an issue outside this case: if the Settlor and the Trustee are the same, would it be necessary to transfer the property?

Practical Tips

1. An attorney should make an effort to confirm ownership. In McHenry County, the real estate tax bill lists the owner of record and the last recorded deed by document number. At the very least, get a copy of the tax bill or some other evidence of ownership if your county does not provide that information on the tax bill.

2. The deed should be recorded with the acceptance in all events. Paragraph (a) does not require a recording, but Paragraph (b) does, which discusses transferring from a trust to a trust,

3. Following the statute cures the issue of delivery.

Sample Trustee’s Acceptance:

TRUSTEE ACCEPTANCE

The Grantee(s), _______________, as Trustee(s) under the provisions of a trust dated the day of ____, 20__, hereby acknowledges and accepts this conveyance into the said trust.

_______________________

As Trustee as Aforesaid 