What Is a Fiduciary Deed?
A fiduciary deed is a legal document that transfers property from one person to another, or from one entity to another.
In some states, the transfer of this type of property requires a court order, while in other states it can be legally transferred with just a signed fiduciary deed form. A fiduciary has been defined as “one who holds the character of a trustee, and to who is committed the care and management of property or funds belonging to another person.”
A fiduciary deed has been defined as “a transfer by deed which makes the grantor into a trustee for the grantee. It places in him an equitable interest.”
How Does It Differ From Other Types of Deeds?
A fiduciary deed differs from other types of deeds in that a transfer is made with the agreement that the grantor will hold the property for the benefit of another person.
In effect, it is a conveyance from one trustee to another, and it must be presented to a county recorder’s office before being an official transfer of property.
The Benefits of a Fiduciary Deed
For some, the biggest benefit is that they will not have to seek out and pay for a lawyer in order to complete the legal process of transferring real estate or other types of property from one person to another.
To complete the transaction on your own, you simply need to know how to draft a deed, get it notarized and file for recordation.
The Drawbacks of a Fiduciary Deed
The biggest drawback is that some states require legal action to be taken before the grantor-trustee can transfer the property of another person into his own name. Moreover, since it is a legal conveyance, the transaction must be recorded with the county recorder’s office in order to make it official.
When Should You Use This Type of Document?
You should consider using this type of document when you want to transfer property from one person or entity to another and you do not need expert legal advice on how to do it.
If it is your intent to hold the title of the property through the standard means of individual ownership, you should not use this type of document.
However, if you want to transfer property in a fiduciary capacity and then turn around and transfer that same property into your own name once you have received an official deed or court order transferring ownership from the grantor to you, then a fiduciary deed can be an option.
Steps to Completing the Process
The steps for completing the process are relatively simple.
First, locate the grantor, who is the person you are transferring property from.
Next, have him sign a fiduciary deed stating that he intends to transfer ownership of the property into your name. Be sure to date and notarize it.
Then, transfer the property according to your state’s laws and regulations. You may want to seek legal advice before transferring property, especially if you cannot find the original grantor or if someone questions your ownership of the property.
What the Fiduciary Deed Must Include in Order to Be Considered Valid
What you need to include in your fiduciary deed depends on the laws of your state. Most of them will require the following information:
- The names of all parties involved
- The description or legal description of the property being transferred –
- What each party is responsible for, if applicable
Who Can Help With Your Needs During This Process
An attorney can help with your needs during this process, as a good legal professional knows the laws of his or her state and will also be able to provide expert advice. In addition, you should check the laws of your state to determine whether or not a fiduciary deed can be used as an alternative to standard deeds.
Alternatives to the Fiduciary Deed
Some other alternatives to a fiduciary deed are:
An Affidavit of Descent
This is an affidavit that can be used to transfer property between two living people, just like a fiduciary deed. It is commonly used by family members when one person wants to pass on his or her belongings after death.
A Quitclaim Deed
This type of deed is generally used by married couples who are purchasing property together. It states that neither spouse has any claim on the property and is not responsible for the other’s debt.
A Grant Deed
This is the standard deed used by most people to transfer ownership of their property. It states, in essence, “This land belongs to me now.”
The Bottom Line
In conclusion, if you are looking for a quick and easy way to transfer ownership of property, you should consider using a fiduciary deed.
However, if your intent is to have legal control over the property you are transferring, it may be better to use another method.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.