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Real estate is often the single largest asset in a California estate, and holding it in your own name means it typically passes through probate, a court process that can take a year or more. A properly funded revocable living trust changes that.

Rogers, Sheffield & Campbell, LLP has structured real estate trusts for Central Coast families since 1973.

Why Put Real Estate Into a Trust?

Placing real property into a trust accomplishes several things a will alone cannot.

• Avoids probate for that property, since the trust, not the individual, holds legal title to it.
• Keeps the transfer private, since trust administration generally happens outside of public court records.
• Provides for management of the property if the owner becomes incapacitated, without a conservatorship proceeding.
• Simplifies transfers of out-of-state property, which would otherwise require a separate probate proceeding in that state.
• Allows a successor trustee to manage or continue renting investment property without interruption if the owner becomes unable to act.

How Does a Trust Work for Married Couples?

Married couples commonly use a joint revocable trust to hold community property, which can simplify administration since both spouses act as co-trustees during their lifetimes and the survivor continues managing the trust without interruption after the first spouse's death.

A trust can also include separate sub-trusts for each spouse's share, which becomes useful for blended families or when each spouse wants to direct their own share of the property to different beneficiaries.

What Types of Trusts Are Used for Real Estate?

A revocable living trust is the most common tool, letting an owner retain full control as trustee during their lifetime while naming a successor trustee to step in at death or incapacity.

Irrevocable trusts, including qualified personal residence trusts, can also remove property from a taxable estate for owners with larger estates, though at the cost of giving up some control over the asset.

The right structure depends on the size of the estate, whether the owner wants continued flexibility to change the plan, and whether reducing estate tax exposure matters more than retaining full control.

How Does a Trust Avoid Probate for Property?

A trust avoids probate only for assets actually transferred, or funded, into it, which for real estate means recording a new deed naming the trust as owner.

Real property left in an individual's name alone, even with a trust document sitting in a drawer, still passes through probate exactly as if no trust existed.

Funding should be revisited any time an owner acquires new property or refinances, since a new deed recorded after the trust was created does not automatically carry the earlier trust language forward.

What Are Common Mistakes When Transferring Property Into a Trust?

The most common mistake is executing a trust document but never recording the deed that actually funds it, leaving the real estate exposed to probate anyway.

Owners with an existing mortgage should also confirm the transfer qualifies for the federal exemption that allows a deed into a revocable trust without triggering the loan's due-on-sale clause.

Owners should also confirm how a trust transfer affects property tax reassessment, since California generally excludes a transfer into a revocable trust for the original owner's own benefit, though the rules differ for irrevocable trusts or transfers naming other beneficiaries.

How Rogers, Sheffield & Campbell Structures Real Estate Trusts

Stephen W. Erickson and Braden R. Leck regularly integrate real estate holdings into estate plans for Central Coast clients, coordinating trust funding with each property's title, financing, and any business use.

Schedule a Case Evaluation

A trust only protects what is actually inside it, which makes proper funding just as important as the trust document itself. Rogers, Sheffield & Campbell, LLP can help Santa Barbara, San Luis Obispo, Ventura, and Los Angeles County property owners structure and fund a trust correctly.

Call 805-963-9721 to schedule a consultation.

Sources

1. Judicial Branch of California Self-Help Guide, “Wills, trusts, and advance care planning”
2. Santa Barbara County Superior Court, Probate Self-Help

The information on this page is provided for general educational purposes only and does not constitute legal advice. Every case is different. Past results do not guarantee future outcomes.