What type of trust can hold real estate?

Short Answer

Both revocable and irrevocable trusts can hold real estate in South Carolina. For ordinary estate planning, a revocable living trust is often the practical choice because the owner can usually serve as trustee and retain control during life. When using a transfer in trust, the trust agreement alone is not enough; a properly executed deed must transfer the property to the trustee and should be recorded.

Understanding the Problem

The issue is whether a South Carolina property owner can transfer real estate into a trust for estate-planning purposes and, if so, which type of trust fits that role. The central decision is usually whether a revocable living trust can hold the property while allowing the owner to retain control during life.

Apply the Law

South Carolina law permits a trust to hold real property. A revocable living trust is created during the property owner’s lifetime and can generally be amended or revoked. An irrevocable trust can also hold real estate, but the owner usually gives up more control, so it requires careful planning. No court proceeding or minimum property value is required merely to place real estate into a valid living trust. The deed should be recorded promptly with the Register of Deeds in the county where the property is located, or with the Clerk of Court where that office performs land-recording functions.

Key Requirements

• Valid written trust: A trust involving real estate must be proved by a writing signed by the person creating it. The trust must show an intent to create the trust, generally have a definite beneficiary subject to statutory exceptions, and give the trustee duties to perform.
• Proper ownership transfer: When the trust is funded by a transfer, the existing owner must execute a deed transferring the property to the trustee in the trustee’s fiduciary capacity. Signing the trust agreement, by itself, does not change the land records.
• Recordable deed: The deed must contain the correct legal description and satisfy South Carolina signature, witness, and acknowledgment requirements before the county recording office will accept it.
• Appropriate trust type: A revocable living trust generally preserves lifetime control but does not shield the owner’s property from the owner’s creditors. An irrevocable trust may impose greater restrictions and should not be used without reviewing its long-term consequences.

What the Statutes Say

• S.C. Code Ann. § 62-7-401 (Methods of Creating a Trust) – permits property transfers to a trustee and requires signed written proof for a trust of real property.
• S.C. Code Ann. § 62-7-402 (Requirements for Trust Creation) – lists the capacity, intent, beneficiary, and trustee-duty requirements for a valid trust.
• S.C. Code Ann. § 62-7-602 (Revocable Trusts) – generally treats a trust as revocable unless its terms expressly make it irrevocable.
• S.C. Code Ann. § 30-5-30 (Prerequisites to Recording) – establishes acknowledgment or proof requirements for recording a deed.
• S.C. Code Ann. § 62-7-505 (Claims Against a Settlor) – provides that property in a revocable trust remains subject to the settlor’s creditors during the settlor’s lifetime.

Analysis

Apply the Rule to the Facts: The individual wants to transfer real property into a trust as part of an estate plan, so a revocable living trust may fit the stated goal while preserving lifetime control. The trust must satisfy South Carolina’s creation requirements, and, to change the record title, the individual must execute a separate deed transferring the identified property to the trustee. An irrevocable trust could also hold the property, but the limited facts do not indicate a reason to accept its additional restrictions.

Process & Timing

1. Who files: The property owner or the person handling the recording submits the deed. Where: The Register of Deeds in the South Carolina county where the property lies, or the Clerk of Court if that county has no separate Register of Deeds. What: A properly prepared deed conveying the property to the trustee, together with locally required recording documents and fees. When: South Carolina does not impose a general estate-planning deadline for making this transfer, but prompt recording helps establish the public chain of title.
2. Review and execution: Confirm the current deed, legal description, ownership interests, trust name, trustee designation, loan terms, and insurance coverage. The owner then signs the new deed with the required witnesses and acknowledgment.
3. Recording and follow-up: Submit the deed to the proper county office. Under S.C. Code Ann. § 30-5-90, the recording office must record an accepted instrument within 30 days after lodgment. After recording, retain the recorded deed with the estate-planning records and confirm that insurance and property records reflect the transfer.

Exceptions & Pitfalls

• A revocable living trust does not provide automatic protection from the property owner’s creditors. South Carolina law allows those creditors to reach property in the owner’s revocable trust.
• Trust language stating that all assets belong to the trust does not replace the deed needed to transfer real estate. More information appears in this discussion of deeds used to transfer South Carolina property into a living trust.
• An incorrect legal description, trust name, trustee designation, signature, witness, or acknowledgment can delay recording or create title problems.
• Existing mortgages, insurance policies, ownership with another person, marital rights, creditor concerns, and homestead protections should be reviewed before signing the deed.
• Property located outside South Carolina must follow the law and recording procedures of the state where the land is located. A trust holding property in several jurisdictions may require coordinated deeds, as discussed in this article about using a South Carolina trust for real estate in multiple states.

Conclusion

In South Carolina, both revocable and irrevocable trusts can hold real estate, but a revocable living trust is usually the practical choice when an owner wants estate-planning control during life and continued management after incapacity or death. The trust must be valid and written, and, when the property is transferred to a trustee, a properly executed deed must transfer the property to the trustee. There is no minimum property value or fixed transfer deadline. Have a South Carolina estate-planning attorney prepare and promptly record the deed with the county Register of Deeds.

Talk to an Estate Planning Attorney

If transferring South Carolina real estate into a trust is part of an estate plan, our firm has experienced attorneys who can help evaluate the appropriate trust, prepare the deed, and explain the recording process and important limitations.

Disclaimer: This article provides general information about South Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed South Carolina attorney.