Transferring Title of Your Home

Transferring title of your home into your living 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 trust.  This article discusses the hows and whys of home title transfers to simple living 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 county 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 still names you (the decedent) as the ower 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 a judge, and open up a probate case”.

A probate case will begin and, of course, completely destroys the major advantage of having a valid trust (avoiding probate).  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 so – 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’s 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: In this example, John Doe’s trust will also have named a “successor trustee”, who will step into that position when John becomes incapacitated or passes away.  When John does eventually pass away, 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.

Transferring title of your home into your trust is a relatively simple but important step.

Do you need an attorney to prepare a simple trust?  If you have the money, then by all means, hire one.

Alternative to paying a private lawyer

But if you want to save a lot, and still get a quality, legally enforceable living trust, that’s written in “plain English”, then consider a cost-effective alternative.

But first, please thoroughly read all of the informative content contained throughout this website.  Armed with this information, you can then decide whether this alternative is for you.  Then, if you’re still interested, click here.