Oops! Forgot to Transfer House Title Into Your Living Trust?
Let’s say dad is a widower and owns his own house. The deed to the house lists dad (an individual) as the owner. Dad then created a valid revocable living trust. The very last page of his trust is called “Schedule A”, and it lists all of the property that is to be owned by the living trust. Included in that list, is dad’s house.
A main reason dad created his trust was for his children to be able to avoid the “probate process” when he dies. If dad had no trust, and title to his house remained in dad’s name at the time he passes away, then there is no one with the authority to sign his name to a new deed to transfer title to his children. No one but a judge, that is, through the probate court.
Now, here’s the beauty of a living trust. When one creates a trust, they transfer title of their home to the “trustee” of the trust. Normally, the person creating the trust (dad) is also the trustee. Under that scenario, dad would be transferring title from himself … to himself, but as the “trustee” of his new trust. Dad continues to hold title to his house, but no longer in his “individual” capacity. Instead, he would now own title as the “trustee” of his new trust.
His trust would also state that when dad passes away, someone else is named as the “successor trustee”. Whoever that person is, would then own title to the house but, again, not in their “individual” capacity. Rather, they would own title as the “successor trustee” of dad’s trust.
This new deed (transferring title to the trust – via the “trustee”)) is then recorded.
This way, since the “successor trustee” technically owns title, s/he has full legal authority to do exactly what the trust instructs them to do; for example, sell the house and split the proceeds equally among dad’s children.
But what if dad forgot to sign a new deed (that transferred title into his trust), or signed one but forgot to record it?
That’s basically what happened in a case called the Estate of Heggstad (1993) 16 Cal. App.4th 943.
Dad’s living trust (Schedule A) listed his house as a trust asset. But he never got around to recording a new deed showing that title was being transferred to his new trust. Then dad died.
His adult child didn’t want to go through the entire, costly, time-consuming probate process, and therefore argued to the judge, that since dad listed his house (in Schedule A of his trust) as a trust asset, then it was obviously dad’s intent that title to his house be owned by his trust.
The court agreed and simply signed an order stating that title to dad’s house was now owned by the “successor trustee” of dad’s living trust. The family was then able to “avoid probate”.
So, even if a family member forgets to transfer property into their trust, there may still be a way to avoid a “full blown” probate, so long as that particular property was listed in the trust as a trust asset.
If you’re interested in creating your own living trust, but don’t want to spend over $1,000 in attorney fees, then consider a cost-effective alternative: A trust that you can create right from your own home, and will ensure that your loved ones will avoid the probate process when you pass away.
If, after reading all of the informative content of this website (Living Trust Advocate), you’re still interested in such an alternative, then click here.