How to title your house after creating your trust.

Dear Len & Rosie,

Before my dad died he and my mom set up a living trust. When my husband and I set up our own trust, our attorney advised us to retitle our house in the trust’s name. My mom’s attorney told her that this wasn’t necessary. He said since she’s leaving the house to her trust in her will, she doesn’t have to go through the hassle and expense of changing the title on her house. My parents kept their home in joint tenancy.

Would it be better for her to change the title of her house to her trust? She wants to do the right thing. Would she have to do it in person, or can she do it by mail? She’s in her 80’s and she likes to save her energy for going only places she really likes to go. The courthouse isn’t one of them.

Suzanne

Dear Suzanne,

Think of a revocable trust as a great big basket that avoids probate. Everything in the basket will pass to your parent’s beneficiaries without the court’s involvement, unless there’s a legal dispute within your family. Everything out of the basket is subject to probate, probate fees, and probate delays, except for assets with pay-on-death beneficiaries, and assets held as Joint Tenants or Community Property With Right Of Survivorship.

Your parents’ home avoided probate upon your father’s death because it was titled in Joint Tenancy. But now the property is titled solely in your mother’s name. She could retitle the home in joint tenancy with the children, but that’s a bad idea because she will no longer be in control of her own home, and her home would be subject to claims from her children’s creditors. She needs to put her home into the trust.

If your mother dies and the home is not in the trust, it is possible to obtain a court order declaring the home to be trust property in order to avoid probate. The appellate court decision in a case named “Estate of Heggstad” will allow your parents’ successor trustee to go to court, on bended knee, and say, “Your Honor, my parents spent thousands of dollars creating a trust to avoid probate, but they just didn’t get around to signing a new deed. Please, oh please judge, say that the home is really part of the trust because my parents meant to do it and it’s not their fault.”

The petition will likely succeed. We do about eight or ten cases like this each year. It’s good money, for us that is. Your mother can help her children avoid spending this money by funding her trust. It is easy to fund the trust. Any estate planning attorney, even your own attorney, can prepare an affidavit of death of joint tenant, to remove your father’s name from the title of the home, and a deed from your mother conveying the home to herself as trustee of the trust. Your mother can sign the documents at the lawyer’s office, or before any Notary Public, and the lawyer can record them with the county recorder.

While you are at it, you should review your mother’s account statements to make sure that her other assets are in the trust except for her retirement accounts, for which you should also make sure your mother has designated beneficiaries. The whole point of having an estate plan is to make things easier for the children. Creating a trust is only half the job. Your mother should finish the job by funding the trust.

Len & Rosie

How to add your spouse to the title of your home.

Dear Len & Rosie,

My husband and I would like to add my name to the title of our home, which we own free and clear.  Presently the home is only in his name. What is the process to add my name?

Nike

Dear Nike,

It’s good that you are dealing with this now. If your husband were to die before you get this taken care of, then the property will be subject to probate. If the home was purchased during the marriage and was paid for with community property (your wage income), then you would inherit the entire home and you could avoid probate with a Spousal Property Petition, which is much cheaper and faster than probate.

But your husband probably first purchased the home before he married you, or he may have inherited it. If that’s the case, then all or a portion of the home is presently your husband’s sole and separate property.  If he were to die without a will, then you would inherit only one-half of his separate property interest (if he has no children or only one child) or one-third (if he has more than one child). We point this out so that you and our readers may understand that if you don’t deal with this now, there could be a big mess if your husband dies - you could be pitted in a legal dispute with your own children or stepchildren, or even your husband’s more distant family members.

There are two ways of dealing with this. The cheap and easy way is to hire a lawyer to prepare and record a quitclaim deed conveying the property to the two of you as either “Joint Tenants” or as “husband and wife as Community Property With Right of Survivorship.” Both forms of title will avoid probate on the death of the first of you to die, but the latter is a better way to hold title, because it ensures that the property will be treated as community property on the first death. If the home is community property, then the entire home gets a step-up in cost basis on the first death, instead of only the half owned by the dead spouse.

The best way of dealing with this property is for you and your husband to see a trusts and estates attorney and create a revocable trust that will avoid probate on the second death as well as the first. While you’re at it, make sure that you have a complete estate plan including Durable General Powers of Attorney and Advance Health Care Directives so that you will each be able to make important financial and medical decisions for one another in the event either of you are ever incapacitated.

Len & Rosie