Can I Transfer My Home Into a Revocable Living Trust?

One of the Most Common Questions California Homeowners Ask

One of the most common questions I receive from homeowners in San Jose and throughout Santa Clara County is whether they should transfer their home into their revocable living trust.

In many cases, the answer is yes.

Creating a trust is often only the first step. For the trust to function as intended, important assets—including real estate—must generally be properly transferred into the trust.

Why Transfer Real Property Into a Trust?

Many California homeowners create revocable living trusts to:

• avoid probate;

• simplify administration after death;

• maintain privacy;

• provide continuity during incapacity; and

• make it easier for loved ones to manage assets.

However, simply signing trust documents does not automatically transfer ownership of your home into the trust.

For more information regarding trust funding, see Why Funding Your Trust Is Just as Important as Signing It.

Will I Still Control My Home?

Generally, yes.

Most revocable living trusts are structured so that the person creating the trust serves as trustee during his or her lifetime.

As a result, homeowners typically continue to:

• live in the property;

• refinance the property;

• sell the property;

• and manage the property as they always have.

The transfer changes how title is held, but it does not necessarily change day-to-day control of the property.

Will Transferring My Home Trigger Property Tax Reassessment?

This is one of the most common concerns among homeowners in Santa Clara County, where property tax savings under Proposition 13 can be substantial.

Fortunately, transferring a home into a revocable living trust will often not trigger reassessment because the beneficial ownership of the property remains substantially unchanged.

However, property tax rules can be complex, and every situation should be evaluated individually.

Homeowners should ensure that appropriate documentation is prepared and recorded to preserve available exclusions from reassessment.

Will I Owe Capital Gains Tax?

Another common concern is whether transferring a home into a revocable living trust creates a taxable event.

In many situations, transferring property to your own revocable living trust does not constitute a sale and therefore does not trigger immediate capital gains tax.

As with any tax-related issue, the specific facts matter and homeowners should consider their individual circumstances before making any transfer.

What Happens If My Home Is Never Transferred Into the Trust?

This issue arises more often than many people realize.

A family may discover that a trust was created years earlier, but the deed transferring the property into the trust was never recorded.

When this happens, the property may not pass through the trust as intended.

In some situations, probate proceedings may become necessary despite the existence of a trust.

For an overview of probate administration, see How Probate Works in California.

Fixing Trust Funding Problems in San Jose and Santa Clara County

California courts occasionally encounter situations where a homeowner clearly intended to transfer property into a trust but never completed the transfer.

Under certain circumstances, a court petition may be available to confirm that the property belongs to the trust, even if it isn’t currently held by the trust.

These proceedings are commonly referred to as Heggstad petitions.

For more information, see Heggstad Petitions Explained: Fixing Trust Funding Problems in California

How Is Property Actually Transferred?

In most situations, transferring real property into a revocable living trust requires preparation and recording of a new deed.

Additional forms may also be required depending on the county where the property is located.

For homeowners in San Jose and elsewhere in Santa Clara County, proper recording is an important part of ensuring that the trust is fully funded.

A Trust Is Only Effective If It Is Properly Funded

For many California families, a home represents their largest asset.

Creating a trust is an important step, but ensuring that real property is properly transferred into the trust is often just as important.

A properly funded trust can help avoid unnecessary probate proceedings and make administration easier for loved ones in the future.

Homeowners considering a revocable living trust may also find these articles helpful:

• Why Funding Your Trust Is Just as Important as Signing It

• Do I Need a Trust or a Will in California?

• What Happens to a Mortgage in a Trust?

• What Assets Avoid Probate in California?

• How Probate Works in California

• Heggstad Petitions Explained: Fixing Trust Funding Problems in California

About the Author

Adam T. Evan is a California estate planning attorney serving individuals and families throughout San Jose, Santa Clara County, and Silicon Valley. His practice focuses on estate planning, probate, trust administration, and guardianships. He helps clients create practical estate plans designed to protect loved ones, avoid unnecessary probate proceedings, and ensure that assets transfer according to their wishes.

To schedule a consultation, contact the Law Office of Adam T. Evan at (408) 515-9005.