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How do I transfer the title of my house into my revocable living trust?

Long Beach, CA |

I set up a revocable living trust two years ago and listed my house as an asset, but the title of my house is only in my own name. How do I change it and is it really necessary? Are there benefits to protecting my house against liens and lawsuits if I transfer the title to my revocable living trust which is in my name? I have no lawsuits or liens against me. I am just thinking ahead to protect my assets. I also plan on renting my house out to tenants in a couple of years and keeping my house as a tax deduction so I think transferring the title to a trust might be a safe idea.

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Attorney answers 3

Posted

You should have funded the living trust by transferring the title to the house to the trust. Otherwise, you won't get any of the benefits of having a living trust with respect to that house.

The following provides a summary for how to do so in Los Angeles County.

First, prepare a Grant Deed or Quitclaim Deed conveying title from yourself to the full name of the trust. A form for the Grant Deed can be found online at:

http://www.lavote.net/GENERAL/PDFS/GRANT_DEED.pdf

Concurrently with the Grant Deed, you will need to submit a Preliminary Change of Ownership Report (Form BOE-502-A, ASSR-70, OWN-70), which can be found online at:

http://assessor.lacounty.gov/extranet/list/forms.aspx

In addition, you need to fill out a Declaration of Documentary Transfer Tax, which can be found online at:

http://www.lavote.net/recorder/PDFS/Declaration_Doc_Transfer_Tax.pdf

Finally, instructions on how to record the Grant Deed can be found at:

http://www.lavote.net/recorder/Document_Recording.cfm

Frank W. Chen is licensed to practice law in the State of California. The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult your own attorney.

Asker

Posted

Do I still personally get to take the tax deduction of the interest I pay against the mortgage? I am paying off a $38K back tax debt via not collecting my tax refunds each year and applying the refund to pay down the tax debt from the IRS. If I transfer title to my living trust, can I still get the same exact amount deducted?

James P. Frederick

James P. Frederick

Posted

Yes. As far as the IRS is concerned, (and assuming your trust is a garden variety revocable trust), you and the trust are the same, for tax purposes. That is because you retain so much control over the trust and its assets.

Posted

Your house can be transferred into your living trust by the simple act of executing and recording a deed. A living trust does not provide any protection against liens and lawsuits. However, the assets in the trust avoid probate upon your death which in California is quite significant. If you decide to rent your home out to tenants in a couple of years, I would suggest establishing a limited liability company (LLC). Proper insurance usually covers any potential loss that may occur to the home or tenants. However, in the event or to the extent an accident or other loss is not covered, your personal assets can be exposed if the house is owned either by you or by your trust. The LLC, if properly established and maintained, should be able to give you protection from any liability that extends past the home itself. To avoid probate, the LLC can be owned by your living trust.

This response does not constitute the establishment of an attorney-client relationship. It is also not to be taken as firm legal advice as such would be contingent on a full inquiry by the attorney into the complete background of the facts and circumstances surrounding this matter. The response is meant to be a helpful guide to a question in a manner which reflects the limited information provided by the inquirer.

Posted

The other attorneys answers are perfect, but I would add: If you have a mortgage on the house you will also want to speak to the mortgage company to advise them that you are recording the deed into the RLT. Some mortgage companies provide a list of approved transactions (that don't trigger the due on sale clause of the mortgage) or have you fill out a form to just confirm that the transaction is okay and doesn't not effect your obligation or the mortgage companies rights.

This is not legal advice nor intended to create an attorney-client relationship.

Mary Lynn Symons

Mary Lynn Symons

Posted

I want to add that as long as you are transferring your residence to a revocable trust, Federal and California law prohibit accelerating the loan. I also suggest that you contact your homeowner's, fire, etc insurance companies to add you in your capacity as trustee as an additional insured.

James P. Frederick

James P. Frederick

Posted

I agree. Otherwise, you could have insurance proceeds that would be payable to an "estate" which would defeat your objective of avoiding probate.

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