California - Put House in Trust?

My dad just set up a living will, and named his investment account and home in the trust. He will contact his investment firm to change title to "His Name, Trustee".

Everything I've read says you also have to do the same for real property. Is this true in California?

Thanks

Reply to
Boris
Loading thread data ...

First of all you have to get your terminology correct. A living will is not the same as a living trust. What people call a living will is more formally known as a health care power of attorney, or Advanced Directive. It has nothing to do with passing property.

A living trust, on the other hand, is a fictitious entity created while you are alive. It's very similar to a corporation, so think of it as your own private corporation created to hold the ownership to all your property, real and personal.

For the most part a trust only works if it becomes the title owner of your property. Anything it does not own will get inherited based on your will or by operation of law, and not by what the trust says.

So yes, if your father has real property, he must deed it into the name of the trust for the trust to be able to administer it when he passes away.

But even though legal ownership changes, there is an exemption from an increase of property tax in California, for transfers to a living trust. There is also an exemption from documentary transfer taxes when recording the deed to the trust. ___ Stu

formatting link

Reply to
Stuart A. Bronstein

A living trust is most certainly NOT a "fictitious" entity. It is quite real.

Reply to
Pico Rico

I'd love to know in what way you think a trust is "quite real."

A trust, like a corporation, is considered a fictitious entity because there is nothing you can look at or touch that is the trust or corporation per se. They can own property, of course, but they have no corporeal being in and of themselves.

The law says that if you have the right piece of paper, the law will pretend there is an entity known as a corporation or trust. It can own property and transact business. But it doesn't really exist.

formatting link

Reply to
Stuart A. Bronstein

Not for federal tax purposes. It's a disavowed entity. What it saves you is (the avoidance of) probate under state law.

Reply to
D. Stussy

A trust can also help save some estate tax for high net worth (joint assets of more than $1 million) married couples. ___ Stu

formatting link

Reply to
Stuart A. Bronstein

Are you talking about AB trusts?

Reply to
removeps-groups

Yes. In the usual situation when one spouse dies, the other prefers to have access to and control of the other spouse's half of marital assets. But when combined assets exceed $1 million (for people who die after the end of this year), and one spouse simply leaves everything to the other one, one of the lifetime exemptions is wasted.

Using a trust allows two lifetime exemptions for the couple, while still allowing the surviving spouse access to and control over the deceased spouse's property.

Congress has been talking about increasing the lifetime exemption. If they do the numbers will change. At this point it hasn't happened.

___ Stu

formatting link

Reply to
Stuart A. Bronstein

formatting link
says that in theexemption is portable. So if one spouse dies and does not use up theirexemption, their exemption or the unused portion is given to the other spouse. It seems this might be for 2011 and 2012 only.

Reply to
removeps-groups

Right. Trusts as tax planning devices are really only useful for people planning on living past December 31 of this year, when the law (at least so far) goes back to the way it was before the Bush tax cuts.

As I have told several clients, from the standpoint of estate tax planning, the best thing you can do to save your kids the most money possible is to be sure you die this year. ___ Stu

formatting link

Reply to
Stuart A. Bronstein

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.