Table of Contents
Key Takeaways
What Trustees Must Do When Transferring Trust Property
How to Properly Transfer Trust Property in California
Common Problems When Transferring Trust Property
Related Resources
FAQ
How The Grossman Law Firm Can Help
Key Takeaways
- Trustees must follow the California Probate Code when retitling or transferring trust property.
- Real property transfers require precise deed preparation, proper recording, and beneficiary notifications.
- Mistakes in titling or recording can trigger probate, delays, or trustee liability.
- The Grossman Law Firm helps beneficiaries protect their rights when a trustee mishandles property or fails to transfer assets correctly.
At The Grossman Law Firm, we regularly help California beneficiaries when a trustee mishandles or delays property transfers. Whether the issue involves a deed, failure to notify beneficiaries, or potential misuse of trust assets, understanding how trust property must be transferred can help you recognize when a trustee is meeting or violating their obligations.
What Trustees Must Do When Transferring Trust Property
Keep Trust Property Separate
California trustees must keep trust assets separate from their own property. Mixing funds or titles risks mismanagement and can violate Probate Code fiduciary duties.
Notify Beneficiaries of Material Facts
Before selling, exchanging, or transferring trust property, the trustee must keep beneficiaries reasonably informed. They must act impartially and consider each beneficiary’s interest.
Act Solely in the Interest of the Trust
A trustee cannot use trust property for personal benefit. They must protect trust assets, keep them productive, and ensure all transfers comply with California law.
Ensure Real Property Is Properly Titled
If real estate is part of the trust, the trustee must ensure the deed correctly reflects ownership in the trust’s name. Improper titling can cause costly problems and may even force the property into probate.
Manage Assets During Incapacity or After Death
A successor trustee manages and transfers property once the grantor dies or becomes incapacitated. Their authority comes from the trust instrument and the California Probate Code, not personal discretion.
Transfer Property Out of a Deceased Parent’s Trust
If property passes to beneficiaries, the successor trustee must prepare and record the correct documents. It may include an affidavit of death and a deed transferring title to the named beneficiaries.
How to Properly Transfer Trust Property in California
1. Confirm Current Ownership
The trustee should obtain a copy of the existing deed to confirm the current title holding.
2. Prepare a New Deed
The new deed must transfer title into or out of the trust and must:
- Identify the current owner and the trust
- Match the legal description exactly
- Be signed and notarized
3. Record the Deed
The trustee must file the new deed with the county recorder in the county where the property is located.
4. File a Preliminary Change of Ownership Report (PCOR)
This report must be filed at the same time as the deed so the county assessor receives notice of the transfer.
5. Address Mortgages or Liens
If the property has an existing mortgage, the trustee may need to contact the lender before completing the transfer.
6. Transfer to Beneficiaries
If the trust directs that the beneficiaries inherit the property, the trustee must prepare and record a deed transferring title to them. Failure to do so correctly may expose the trustee to liability.
Common Problems When Transferring Trust Property
Incorrect Deed Preparation
Mistakes in the deed, such as a wrong legal description or missing signatures, can invalidate a transfer.
Failing to File Required Documents
Failing to file the PCOR or to record the deed can delay matters. It may trigger reassessment, penalties, or probate complications.
Insurance Issues
When property changes ownership, homeowners’ insurance must be updated to avoid coverage gaps.
Mortgage or Indebtedness Problems
Lenders may object if a trustee transfers property without addressing outstanding loans.
Risk of Probate
Suppose real estate is not correctly titled in the trust. In that case, it may need to go through probate to be transferred to beneficiaries.
Potential Breach of Fiduciary Duty
If a trustee mishandles a transfer, delays the process, or fails to act in the beneficiaries’ best interests, they may be violating multiple fiduciary duties.
Related Resources
- Overview of California Trust Litigation
- Know What You’re Getting Into: The Timeline of a Trust and Estate Lawsuit
- How to Get Your Trustee to Distribute Your Inheritance
- 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties
- Can’t Afford a Probate or Trust Attorney?
FAQ
Can a trustee transfer property without notifying beneficiaries?
Trustees must keep beneficiaries reasonably informed about significant actions, including sales, transfers, and distributions.
What happens if the deed is wrong?
A defective deed can delay transfers, trigger probate, or expose the trustee to liability for failing to carry out their duties.
Can beneficiaries challenge a property transfer?
Yes. If the trustee breaches fiduciary duties or acts contrary to the trust’s terms, beneficiaries can petition the probate court for relief.
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we help beneficiaries and heirs throughout California enforce their rights in probate and trust litigation.
Call (888) 443-6590 or fill out our Get Help Now form. Our Intake Specialists can evaluate your case at no cost. Qualifying matters will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Originally Published Nov 15, 2023