Title to your home should be transferred into your living trust in order to “avoid probate”.  Everyone’s heard this mantra, but let’s take a look at how title should be transferred and why.

Say you don’t have a trust.  Instead, all you have is a Will, and it states that when you die, all of your property is to be given to your children in equal shares.  Eventually this will be accomplished, but your Will guarantees that a probate proceeding will be required in order to transfer title of your home to your children.  Here’s why:

At some point, your children will want to sell your house and split the proceeds equally.  They’ll hire a real estate broker, find a buyer, and the sales documents will be in escrow.  However, before the sale can be finalized, a title insurance company will need to conduct a records search at the local county Recorder’s Office to make sure that title is properly passing from your children to the buyer.

Unfortunately, the last recorded deed will show that you’re still the title owner of record.  You’re now deceased and can’t sign another deed to transfer title from yourself to the buyer.  Your kids tell the title insurance company that they own the house because that’s what your Will states.  But the title insurance company must refuse to accept the Will as evidence of ownership (anyone can forge a Will), and will instruct your children to hand the Will to a judge and open up a probate case.

Now the whole process becomes a public matter.  Most states require that notice of the probate petition be published in the local newspaper.  The court may require proof that all of your relatives to the second-degree have received notice of the probate case and hearing.   Everyone and their brother get the opportunity to show up in court and throw in their two cents.  Only after the judge is convinced that every relevant person has had an opportunity to be heard, will s/he sign a court order that states that your children now own title to your house. 

This may take a year or more, and will certainly involve court costs, publication costs, attorney fees, and executor fees.  What a nightmare.  And it all could have been avoided if a proper trust had been created and title of your home transferred into the trust.

In a simple living trust, you’re called the “trustor” (or “settlor”) – meaning you’re the person who created the trust and gave written instructions on who receives your estate when you pass away. 

You’re also called the “trustee”.  You manage the trust and actually own title to trust property in that capacity. 

Lastly, you’re the “beneficiary” and entitled to use all of the trust property for your benefit while you’re alive.

So, how do you transfer title of your house into the trust?  Simple.  A new deed is created and recorded in the local county Recorder’s Office. 

Let’s say your current deed states that the owner of your house is “Sally Smith, an unmarried woman”.  The new deed would state that “Sally Smith, an unmarried woman, grants full title to Sally Smith as the trustee of the Sally Smith trust”.  It’s that easy.

Remember that every trust must have a “trustee”.  Your trust will name someone (one of your children, for example) as your “successor trustee” – to take your place when you pass away.  Your successor trustee will then record a simple document that identifies your trust and the fact that you named him/her as your successor trustee, along with a certified copy of your death certificate. 

In their new capacity as successor trustee, they now have full legal authority to do exactly what the trust instructs them to do: divide the house (via sale) into three equal shares for your children.  There’s no reason to ask a judge for permission to do anything. 

That’s how a trust “avoids probate” and how you transfer title into your trust.

George F. Dickerman is a Riverside, California elder law attorney.  His practice focuses on advocating for, and protecting, the elderly and their loved ones.  For more information, please visit: elder-law-advocate.com.