In Trusts we Trust

If you want to make life simpler for your heirs it is best to place your house in a trust.

I recently listed a house where the owner had passed away. He had left the house to his two sisters. He bought the house as an unmarried man and never married while he was in it. He had no children. His will was very clear that he intended to leave the house to his sisters. It was notarized and witnessed. Nonetheless, the probate court took more than four months to approve the sister as an executor before the house could be sold. And after talking to others that have been through the process, this was fast! This may have been avoided if the house had been in a trust.

What is a trust? According to Wikipedia, “In law, a trust is a relationship in which the holder of property (trustor) givers it to another person or entity (trustee) who must keep and use it solely for the benefit of another person or group of persons known as the beneficiary.”

Adding your house to your trust increases the likelihood that there will be a smoother transition of the trust’s assets, including the house, to your heirs after your death.

According to attorney Kimberley Spears of the firm Spears and Shelf, “People with a Trust also typically have a ‘pour-over' Will, to ensure that all their assets are distributed according to the terms of their Trust.  The will is a document that expresses the wishes of the will’s creator regarding the distribution of property. A trust is an arrangement to make sure those wishes are followed.

What is probate? Probate is the legal process where the assets of the deceased are managed by a court. This can be the case whether or not the deceased has a will. This can significantly delay the transfer of the assets. Having a properly executed will and trust may bypass this process entirely.

There are also tax benefits to a trust, but definitely check with an attorney and tax accountant about that. Further a trust can spell out how your affairs are handled in the event of illness or disability.

Does having a properly executed will and trust keep my home out of probate court? We asked Kimberley Spears this question as well. Her answer: Not always. “You might have a properly executed Will and Trust, but if you don’t transfer your real property to the Trust while you are living, then a Court will have to be involved to transfer it after your death, and sometimes that involvement includes a full-blown Probate proceeding. It is exceedingly important to make sure that your real property and other probatable assets are property titled to your Trust. Your attorney can provide you with instructions for each type of asset.”

There are definite benefits to having a trust and a will in place. Consult an attorney to set one up. Your heirs will be glad you did.

For a deeper dive about California inheritance laws the SF Chronicle recently had a great article.