Understanding Title Requirements for Living Trusts in California

In today’s real estate market, living trusts have become an essential tool for homeowners looking to protect their assets, avoid probate, and maintain privacy. However, holding title to real property in a living trust comes with specific requirements, especially when dealing with title insurance and property transactions.

Whether you're buying, selling, or refinancing a home held in a trust, understanding these requirements can help you avoid delays and legal complications. Here’s what you need to know:

A living trust, also called an inter-vivos trust, is created while the trustors (property owners) are still alive. Unlike a will, which takes effect after death, a living trust allows property owners to transfer assets into the trust and manage them during their lifetime.

Key Parties in a Living Trust

• Trustor (Settlor) – The person who creates the trust and transfers property into it.
• Trustee – The person (or entity) responsible for managing the trust and holding title to the property. Often, the trustor appoints themselves as trustee during their lifetime.
• Beneficiaries – Those who will inherit the assets after the trustor passes away, usually children or grandchildren.

Can a Trust Own Real Estate?

A living trust itself cannot directly own real estate. Instead, the trustee holds title on behalf of the trust and has the authority to buy, sell, or transfer property, subject to the trust’s terms.

Title Insurance Requirements for Property Held in a Trust

If a property is held in a trust, title companies will require a Certification of Trust to verify details about the trust. This document should include:

✅ Trust execution date
✅ Names of the trustor and trustee
✅ Trustee’s powers and signature authority
✅ Whether the trust is revocable and who has revocation power
✅ Legal description of the property held by the trust
✅ A statement confirming the trust is still in effect and unchanged

Key Considerations for Trustees

• Multiple Trustees? If there are multiple trustees, all must typically sign unless the trust allows fewer signatures.
• Power of Attorney? A trustee cannot delegate authority via Power of Attorney unless the trust explicitly allows it.
• What Happens If Trustees Die? If all trustees pass away or refuse to act, a new trustee must be appointed by the trustor (if possible) or through a court order.

How Is Title to a Property in a Trust Worded?

When transferring property to a trustee, the deed must clearly reflect the trust’s details. Example:
👉 "John Doe and Mary Doe, as trustees of the Doe Family Trust, under declaration of trust dated January 1, 1992."

Limitations on Trustee Actions

A trustee’s authority is limited by the trust agreement. The California Probate Code outlines general trustee powers, but title insurers will only approve transactions if the trustee acts within the trust’s terms.

Final Thoughts

Holding title to property in a living trust offers estate planning benefits, but it’s important to understand the title requirements to avoid legal and financial complications. Whether you’re buying, selling, or refinancing property in a trust, consulting a title professional or estate attorney is always recommended.

Need help navigating real estate transactions involving living trusts in the San Ramon & Tri-Valley area? 📞 Call me at 925-415-0835 or visit www.ramamehra.com for expert guidance!