An irrevocable trust is an estate planning tool you can use in California to help shield some of your assets from the public eye and to create your own transfer plan for them. Since a trust is managed outside of probate, it does not become a matter of public record when trust distributions occur. When choosing to use a trust as part of your California estate plan, you should work directly with an attorney to clarify the proper trust structure and actions you must take for it to work.
Placing your home in a revocable trust is a great strategy for estate and financial purposes, but what happens if you intend to shift your strategy in the future? For example, imagine that you placed a home in a trust while you were still paying off the mortgage.
If you now intend to downsize, this raises important questions about what to do with it. Remember that the trust is technically the seller in the real estate transaction if the trust has been properly bestowed ownership. This means that the legal title to the property is owned by the trust.
You were probably told when you created the trust with the help of a lawyer that you can treat the property inside it as your own. However, the trust is a distinct legal entity from you as an individual and even though you still maintain the role of beneficiary and grantor, you must support the legally recognized status of the trust’s ownership of the property.
The deed, therefore, needs to come from the trust itself when selling the home. You will still sign the deed so long as you are still the trustee. An affidavit of trust will likely be used to prove your authority in making such a real estate transaction. When making any of these kinds of sales you’ll want to work with an experienced real estate lawyer and possibly your estate planning attorney to understand any potential repercussions.
Likewise, if you intend to put your new property inside the ownership of a trust as well, you’ll want to share this information directly with your estate planning attorney so that you can make these plans as soon as possible. For more information about protecting your interests, schedule a consultation with an experienced estate planning lawyer.
