Irvine, California (PRWEB) December 17, 2013
Trusts must be funded with real property to avoid probate. Funding is by deed from the owner to the owner as trustee of his or her trust. This Tip Sheet by Mark W. Bidwell is on how to fund a living trust.
A deed is a document signed by the owner of the real property that transfers ownership. Deeds are either “warranty deed” “grant deed” or “quit claim deed.” Grant deeds and warranty deeds by law have the owner’s promises he or she has not conveyed the property to someone else and the real property does not have any taxes, loans, assessments or liens secured by the real property.
A quit claim deed conveys ownership “as is.” Quit claim deeds do not contain any implied warranties of debt outstanding or good title. These warranties are not needed to fund a trust because the trust transfer deed does not change ownership, only how the real property is titled or owned. A person is transferring property from himself or herself to his or her trust. No third party is involved.
The deed must be part of the public database maintained by each county in California. The deed is “recorded” in the county where the real property is located. Recording puts the world on notice how title is held and is the final word on ownership.
Transfers in and out of a trust are excluded from reappraisal and increase in property tax base. To obtain the exclusion, the grantee fills out a form for the county assessor entitled “Preliminary Change of Ownership Report” (PCOR).
There is no transfer tax on trust transfer deeds. California Revenue and Taxation Code exempts trust transfer deeds from transfer tax. To obtain this exemption the tax code must be stated on the deed.
Trusts are unfunded for the following reasons; real property was omitted when the trust was created, real property was acquired after the trust was created and real property was transferred out of trust by a lender for underwriting purposes. A trust transfer deed filed with the county recorder will remedy each of these problems.
On death of the owner the successor trustee transfers real property to beneficiaries identified in the trust. The successor trustee files an “Affidavit of Death of Trustee” with the county recorder. The affidavit allows the successor trustee to sell the real property or transfer ownership as directed in the trust. Transfer of ownership out of the trust is by deed.
Mark W. Bidwell markets primarily through websites such as http://www.DeedandRecord.com. Office is at 18831 Von Karman Avenue, Suite 270, Irvine, California 92612. Phone number is 949-474-0961. Email address is Mark@DeedAndRecord.com.