Transferring Real Estate out of Trust
What happens when mom and dad have passed away and the Family Trust still holds title to real estate contained in the Family Trust?
When mom and dad set up their Family Trust they placed or should have placed, their real estate holdings into Trust. The first item concerning real estate arises at the first Parent/Trustee death. The surviving Parent/Trustee should file an Affidavit of Death of Trustee at the County Recorder’s Office where the real property is situated. This is a relatively easy form to fill out, one page long. In addition, the form can be downloaded online at the County Recorders website.
When recording the form at the County Recorder’s Office, you will need a certified copy of the death certificate attached to the Affidavit of Trustee Death Form. By filing this form, you are informing the County Recorder and Assessor of the passing of one of the trustees and that there is only one trustee concerning the real estate.
The Affidavit of Death of Trustee form should also be accompanied by a Preliminary Change of Ownership Report. This form is also available at the County Recorder’s website. The form is important because the Trustee is informing the County that there should be no Real Property Tax Reassessment of the subject property because of the death.
When the second parent passes away or the passing of a single parent, the steps are “essentially” the same as above. File the Affidavit of Death of Trustee form with a certified copy of the death certificate and Preliminary Change of Ownership Report. The difference here is that the Successor Trustee(s) named in the Trust Instrument will now assume the Trustee(s) role of closing out the estate by way of the Trust Instrument.
Normally, children are the beneficiaries under the Family Trust and title to real estate can pass to any and all children by way of a Grant Deed or the realty can simply be sold. The Grant Deed should be accompanied by a Preliminary Change of Ownership Report, informing the County Assessor that the transfer is a Parent to Child/Children transfer and is excluded from property tax reassessment under California Proposition 58. The transfer should also be done within three years of death of the second to die. If not, the exemption is waived and the County will reassess the realty for property tax purposes.
After the Grant Deed has been filed with the County Recorder placing the child/children on title, the Trustee will get a two page form from the County Assessors’ Office, wanting more information regarding the transfer. The Assessor wants to make sure that the transfer is indeed a Parent to Child/Children transfer. The Assessor will ask for a copy of the trust. I usually give them the Trust and Schedule A. These documents are not available for public viewing. Normally, you have 30 days to get the information back to the Assessor or else they will begin reassessment procedures.
If you have a situation like this, please give me a call!!!