Unlike a last will and testament, estate planning through a living trust involves the transfer of title to assets during your lifetime. For example, if you want your house to be part of a revocable living trust, you must execute and file a new deed transferring ownership from yourself to the trustee—which in most cases is also you. Failure to properly transfer an asset means a probate court may determine it is not part of the trust at all and should pass instead under your will.
San Diego Court Finds New Trust Sufficient to Transfer Real Estate
What about cases where you create a new trust and want to transfer assets into it from an earlier trust? A San Diego appeals court recently addressed this question. In this case a man, now deceased, created a revocable living trust in 1985, into which he transferred a parcel of real property located in San Diego. The man created a second, irrevocable trust in 2009, which listed the same property on the schedule of trust assets. The man did not, however, sign a deed transferring the property from the 1985 trust to the 2009 trust.
After the man’s death, litigation ensued among the man’s relatives over which trust actually owned the property. This was important because each trust named different successor trustees and beneficiaries. The man’s daughter sought probate court approval for the 2009 trust. His grandson argued in favor of the 1985 trust.
The probate court agreed with the grandson’s argument that the San Diego property was never properly transferred from the 1985 trust to the 2009 trust. The daughter appealed. On April 13, the California Fourth District Court of Appeal issued a published decision reversing the probate court and siding with the daughter. First, the Fourth District said the deceased was not required “to execute a separate deed in order to transfer the [San Diego] property to the 2009 trust.” The deceased’s statement in the 2009 trust that, “I transfer to my Trustee the property listed in Schedule A, attached to this agreement,” was sufficient to manifest his intent “to convey real property in California.”
Second, given that the deceased was the “sole trustee” of the 1985 trust, and that trust was revocable at any point during his lifetime, the Fourth District held that his “signature on the 2009 trust was ‘sufficient to convey good title’” from one trust to the other.
Get Advice from a California Estate Planning Lawyer
The Fourth District’s decision does not mean you should ignore the formalities of transferring assets into a trust—or even from one trust to another trust. The circumstances of each person’s estate planning differ. For instance, if you create a living trust where you and your spouse are co-trustees, there may be language that requires approval from both of you before transferring any property out of the trust.
An experienced San Diego estate planning attorney can review your situation and help you decide on whether a trust may be beneficial. Contact the Law Office of Scott C. Soady if you would like to speak with an estate planning lawyer today.