If you own real property, you may want to consider transferring it into a revocable trust to ensure your loved ones receive it upon your death. Transferring real property into a trust comes with many benefits that should be taken into consideration upon execution of your trust:
In order to create a valid legal trust, you must fund it with an asset. Then, that asset will be subject to the terms of the trust agreement. However, if your real property is not titled in the name of your trust, it will go through the probate process upon your passage.
If your real property is referenced in your last will and testament, it will be distributed according to your wishes. In the absence of a last will and testament, your real property will be distributed to your heirs according to California intestate succession laws.
Finally, if you own out-of-state real property that was not transferred into a trust, your loved ones must file probate in that state. Thus, transferring all of your real property into a trust can save your loved ones from lengthy probate proceedings.
Avoiding Estate Taxes
If you do not transfer your real property into a trust, it can be subject to estate taxes. While estate taxes will not impact you directly, they will impact your heirs in the intestate succession of your real property.
If you become mentally incapacitated, the court may establish a supervised guardianship on your behalf. However, if you have a revocable trust funded with your real property, your trustee will manage it instead. By transferring your real property into a trust, you ensure it will be administered according to your desires.
Some parents hold their real property as joint tenants with the right of survivorship with their children. For example, a parent may form a joint tenancy with one child in hopes of them selling the home and distributing the proceeds between their siblings.
Unfortunately, by holding joint tenancy with one child, a parent legally disinherits the other children. However, by transferring real property into a trust, you can choose your beneficiaries yourself.
How to Transfer Real Estate Into a Trust
You can transfer real estate into a trust by executing and recording a trust transfer deed. A trust transfer deed is specially designed to transfer real property into and out of a living trust. Additionally, upon submitting the trust transfer deed for recording, you will also need to send a preliminary change of ownership form.
Record the trust transfer deed in the county in which the real property is located. It will contain the legal description of the real property, the assessor’s parcel number, and the exact name of the trust. Finally, note that you must pay a fee upon submitting the trust transfer deed for recording.
Putting Property into a Trust
In conclusion, putting property into a trust after execution is a critical part of the estate planning process. Therefore, make sure you transfer your real property into a trust prior to your passage.
In addition to real property, you should put assets such as stocks, bonds, and savings accounts into your trust. However, liabilities and general insurance policies can stay outside the trust.
Remember, any assets that you leave outside of your trust will be subject to the probate process.
At A People’s Choice, we have helped thousands of families create valid revocable trusts. Contact us today through our online system or call 1-800-747-2780 to find out more information about how we can help you transfer real property into a trust.