Table of Contents
- Key Takeaways
- Understanding Common Ownership
- Trust Property Ownership: Legal vs. Equitable Title
- Key Differences Between Legal and Equitable Ownership
- What Can Go Wrong When Transferring Trust Property
- How The Grossman Law Firm Can Help
- Related Resources
- FAQ
Key Takeaways
- Common ownership involves two or more people holding title to the same property, such as joint tenancy or tenancy in common.
- Trust property creates a unique ownership split: the trustee holds legal title, while beneficiaries hold equitable title.
- Legal title gives control; equitable title gives the right to benefit from the property.
- Mismanaging or improperly transferring property into a trust can trigger serious legal and financial problems.
- The Grossman Law Firm helps California beneficiaries and trustees resolve title disputes and protect trust assets.
Understanding Common Ownership
Common ownership—also called joint ownership—exists when two or more people or entities share legal rights to a property. Each co-owner has rights and responsibilities set by law.
Examples include:
- Joint tenancy (owners share equal interests with right of survivorship)
- Tenancy in common (owners hold separate, distinct shares)
- Community property (property jointly owned by spouses or registered domestic partners)
The rules for each form of ownership are defined by California law and determine how property passes upon death and who has authority to manage or sell it.
Trust Property Ownership: Legal vs. Equitable Title
When assets are placed in a trust, ownership is divided into two parts: legal title and equitable title.
- Legal Title:
- The trustee holds legal title. This gives them the right—and the obligation- to manage, control, and make decisions about the property according to the terms of the trust.
- Equitable Title:
- The beneficiaries hold equitable title. They do not control the property, but they are entitled to enjoy its benefits, such as income, dividends, or use of the asset.
In California, this division is what defines the relationship between trustees and beneficiaries. Trustees act as legal owners bound by fiduciary duties; beneficiaries hold the beneficial interest and the right to hold trustees accountable.
Key Differences Between Legal and Equitable Ownership
| Aspect | Legal Title | Equitable Title |
|---|---|---|
| Who Holds It | Trustee | Beneficiary |
| Main Right | Manage and control the property | Receive the benefits of ownership |
| Authority | May sell, lease, or transfer property (per trust terms) | Cannot control or sell property directly |
| Fiduciary Duty | Owed by the trustee to the beneficiaries | Right to enforce that duty |
| Purpose | Administration and legal compliance | Economic benefit and enjoyment |
What Can Go Wrong When Transferring Trust Property
Errors in transferring or managing trust property can lead to disputes, tax issues, or even probate. Common problems include:
- Incorrect Transfer:
- Failing to file required documents—such as the Preliminary Change of Ownership Report—with the county recorder can invalidate a transfer.
- Insurance Coverage Issues:
- Not updating property or liability insurance after transferring assets to the trust can cause coverage lapses.
- Mortgage and Debt Problems:
- If property with an existing mortgage is transferred without notifying the lender, it can trigger default or due-on-sale provisions.
- Probate Complications:
- Real property not properly titled in the trust may have to go through probate, delaying distributions and increasing costs.
To avoid these issues, trustees and beneficiaries should work with legal professionals who understand California trust law and the county-specific recording requirements.
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we focus exclusively on probate, probate litigation, and trust litigation. Our firm helps clients throughout California:
- Clarify ownership rights between trustees and beneficiaries
- Resolve disputes over legal and equitable title to trust property
- Correct improper transfers or recording errors
- Recover trust assets when mismanagement or breach of duty occurs
We bring decades of specialized experience to every case, protecting California beneficiaries and heirs from avoidable losses.
Call (888) 443-6590 or fill out our Get Help Now form below.
Our Intake Specialists can evaluate your case at no cost to you.
Qualifying cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Related Resources
- Overview of California Trust Litigation
- How to Get Your Trustee to Distribute Your Inheritance
- Tips for Determining the Damages for a Breach of Fiduciary Duties
- 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties
- Can’t Afford a Probate or Trust Attorney?
FAQ
Who owns trust property—the trustee or the beneficiaries?
The trustee holds legal title to the property and manages it, while the beneficiaries hold equitable title and benefit from it.
Can a beneficiary sell trust property?
No. Only the trustee, as the legal titleholder, can transfer or sell trust property—unless the trust document allows otherwise.
Can legal and equitable ownership exist at the same time?
Yes. There are two sides to trust ownership: one manages, the other benefits.
What happens if trust property isn’t properly transferred?
Improper transfers can force the property into probate or expose the trustee to liability. Immediate legal action may be needed to correct the title.
Originally Published Dec 26, 2023