Want to Avoid Probate? Take Care of Your Home Title!

George Dickerman

Transferring title of your home to a trust is a necessary step.

Posted March 8, 2010

By George Dickerman

Transferring title of your home into your trust is a necessary step that must be done properly in order to ”avoid probate.” Everyone knows that avoiding probate is one of the primary advantages of creating a revocable trust. This article discusses the hows and whys of home title transfers to simple revocable trusts.

First, let’s consider what happens to your house if you don’t have a trust but, instead, only have a will. Let’s say your will states that all of your estate will go to your children in equal shares when you pass away.

When you die, your children will most likely get together and decide to sell the home and splt the proceeds equally. They’ll contact a real estate broker, find a buyer, and now the proposed sale is in escrow. However, one of the last things that must be done is for a title insurance company to conduct a search of the local recorder’s office to confirm that title is properly passing to the new buyer. This is called title insurance.

When the title company does its search, it will find that the last recorded deed names you (the decedent) as still the owner of the house. The title company will tell the kids that they don’t have authority to sell the home because title is still held by you, and you’re deceased!

Your kids will say: ”But we have the will and the will says that the house is ours.” The title company will respond: ”Anyone can forge a will. Our job is to insure proper title and the court will have to confirm your authority. Take the will, hand it to the judge, and open up a probate case.”

Remember: Your children will not be able to use your financial power of attorney to transfer title after your death. In California, for instance, a power of attorney automatically terminates upon death.

A probate case will begin and, of course, completely destroys the major advantage of having a valid trust. Unlike the privacy of a trust, a probate matter is public. Heirs and relatives must be put on notice that a probate case has been opened. They must be advised that on such and such a date and time, a hearing will be held in which anyone can speak to the court and throw in their two cents. Lawyers will be retained, the probate petition will be required to be published in the newspaper and costs and attorney fees will be substantial.

Eventually—after a year or two—the judge will get around to signing an order that declares that title to the home is now owned by your kids in equal shares. The court order will then be recorded in the county recorder’s office and, finally, your kids own the house. What a nightmare.

To avoid this problem, title to your home will be transferred to your trust during your lifetime. Remember, every trust will have a ”trustee” whose job is to manage the assets owned by the trust. If it is your trust, then you probably have named yourself as the trustee.

Title to all property that is owned by a trust is actually owned by the trustee of the trust.

For example, before John Doe created his new trust, his deed stated that title to his home was owned by ”John Doe” (individually). Now that John Doe has created his new trust, he will execute a new deed that transfers title from ”John Doe,” to ”John Doe as the trustee of the John Doe Revocable Trust.” It’s really that simple.

Of course, the new deed must then be recorded in the Recorder’s Office of the county where the house is located.

Remember: John Doe’s trust will also have named a ”successor trustee,” who will step into that position when John becomes incapacitated or passes away. At that time, the successor trustee will then have full legal authority to do whatever the trust terms instruct him or her to do, including transferring title of the home to John’s beneficiaries.

You should check with a local attorney to determine the particular type of deed that should be used to transfer title to the trustee. Hopefully, your revocable trust was created by a qualified lawyer who completes all of these tasks and sees to it that the deed is properly recorded.

The need to transfer title into your trust also applies to timeshares, which many couples own. Most timeshare deeds have a very lengthy ”legal description” that, of course, must be included in the new deed that transfers title to your trust.

Some people also own out of state property. Title to those real properties should also be transferred into your trust. A good tip is to remember to contact the local county recorder’s office in the state where the property is located to obtain information on their requirements of local forms (if any), recording costs involved, and any other documentation they may require.

Another helpful tip: If you don’t have a copy of your deed, then contact a local title insurance company and request a copy. They’ll usually print one for you immediately if you go to their office or mail you a copy for a minimal fee. They will also usually e-mail you a copy upon request.

Transferring title of your home into your trust is a relatively simple but important step. Again, seek the advice of a qualified attorney to assist.

George Dickerman is an attorney with 24 years’ experience. A graduate of the University of California, Berkeley and Western State University College of Law, he has devoted the past thirteen years almost exclusively to the field of elder law. He is often asked to speak about elder law issues at various County government functions and workshops created to inform and educate the elderly, their caregivers and family. His website is Elder-Law-Advocate.com.