How do you fund a revocable living trust with community property (family residence) and still maintain community property status
Huntington Beach, CA |
If you fund a revocable living trust with family residence that is community property but deed now states title held by trustees how does property still maintain community property status for purposes of stepped up basis
Your question is a little troubling because it sounds like you did the trust yourself, which is not advisable. Your question highlights one of the reasons. If you used an attorney, you should think about getting a new one.
Your trust should have wording that states that all property contributed maintains the character of the property contributed. In addition, in California, you have to actually state you are transmuting community property to separate, so the mere transfer to the trust, should not cause a transmutation. Again, if you used an online service, I would not venture to guess what the wording states.
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Attorney Shultz is correct. It is absolutely vital that you retain an experienced estate planning attorney to review your circumstances, prepare the necessary documentation and assist you in funding the trust. Good luck to you.
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I am licensed in Connecticut and New York and my answers are based upon the law in those jurisdictions. My answer to any specific question would likely be different if I were to review a client's file and have the opportunity to interview the client. Accordingly, I strongly urge you to retain an attorney in your jurisdiction with respect to any legal matter.
I agree with my colleagues. I would point out that trust funding is one of the things that should be done by the estate planning attorney as part of establishing the trust. If you did not use an attorney, and I agree that it sounds like you did not, then you have already made a big mistake, and you should remedy that by having the entire estate plan reviewed to make sure that it is valid and does what you want it to do.
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I agree wholeheartedly with Mr. Schultz. I would only add that the trust itself has to be drafted to comply with the community property rules. If the rights of the spouses to revoke, amend or manage the trust property are inconsistent with community property ownership, that would cause problems. And, by "problems," I mean "court."
I agree with Mr. Schultz. I would only add one thing. It appears that one of the assets funded to the trust is the family residence. Make sure to consult an attorney about CLAIM FOR REASSESSMENT EXCLUSION. Generally, transfers of property are subject to reassessment by the assessor, which generally results in higher taxes unless the exclusion form is executed. I would recommend consulting an attorney. Best of luck.