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How to Transfer California Property Out of a Deceased Parent’s Trust

transferring property out of a parent

Updated 2/25/2021

When a parent dies who has had the forethought to establish a trust, the probate process can be avoided, which can be time-consuming and costly.  

Now, let’s assume that the parent/trustee  has real property in California and has named a successor trustee whose job it is to ensure that the property is passed on to the parent’s heirs. How is this done?

Keep in mind that this is meant as a general overview and should not be a substitution for legal advice regarding your specific situation.

After the trustee has fulfilled all of his or her duties (sending the Trustee’s Notice, Publishing Notice to Creditor’s, etc.), the following documents must be submitted to the recorder’s office of the county the property is located in:

  • An Affidavit of Death of Trustee

The successor trustee must affirm that the parent / trustee has died and that the successor trustee named in the parent’s trust is the new trustee. The affidavit must also state that the deceased parent / trustee owned the real property. An original certificate of death must be submitted in support of the affidavit.

  • A New Deed

When the affidavit is filed and recorded with the county recorder, the successor trustee can sell the property or transfer ownership to the decedent’s children. If the property is going to be kept by the family, a new deed transferring ownership to the beneficiaries named in the trust is necessary. This is where you need to be especially careful in California, however. Prop 19, effective as of February 16th, 2021 significantly decreased the amount of property that can be inherited without incurring a reassessment for property tax purposes. Beneficiaries also get the stellar tax incentive of the “step up in basis” if they choose to sell the property rather than holding on to it.

If the beneficiaries decide to keep the property, the transfer can be done using a “Grant Deed.” The new deed must also be notarized and recorded with the county. In many of our trust administrations, one beneficiary chooses to “buy out” the other beneficiaries and maintain the property. When this is done, an Appraisal is necessary to determine the current value of the property. Generally trustees choose to work with an attorney to structure a buy out that is agreeable to all parties.

  • A Reassessment Exclusion Form

Fortunately, in California there is a property tax exemption when the transfer of real property is from parent to child. Unfortunately for beneficiaries, that property tax exemption has recently gotten a lot smaller. And, it only applies to a parent’s primary residence that will be used as the child’s primary residence. One also has to be very careful with how the forms are drafted and submitted to the Assessor in order to receive the exclusion. Nevertheless, to take advantage of the property tax exclusion, a Claim for Reassessment Exclusion Form must be submitted to the County Assessor.

Transferring ownership of real property (a home, building, or land) out of a trust is part of the formal legal process of “administering a trust.” If done incorrectly, trustees can be held legally liable for their actions or inactions, and beneficiaries can be stuck with unnecessary fees and tax bills.

To schedule a consult regarding Trust Administration in the SF Bay Area, contact my SF East Bay Trust and Estate Law Firm at 925-322-1795.


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4 Responses
  1. how to remove a trustee in california

    In some cases, the trustor has a falling out with their chosen trustee, or the trustee doesn’t do right by the terms of the trust after the trustor has passed away. Should this happen, there may be a need for their removal.

  2. Amy Hellesen

    Thanks for the valuable information. If the trustor passed away in Dec. 2020 and one beneficiary, who is the trustee, wants to take the house using the appraisal done at time of death, not a current appraisal.The home has appreciated between $200,000 and $300,000. Additionally , the trustee used trust funds to make improvements to the house and has refused to make any disbursements although there are over $4 million in liquid assets What recourse do the other beneficiaries have?

    1. Talbot Law Group

      Hi Amy, If you are in CA you can potentially bring a lawsuit against the trustee. In general, however, beneficiaries will want to hire an attorney first who can try and work with the trustee to resolve the situation.

  3. Brenna Ramos

    Thank you for this information. Does your info apply to my situation? Id like to know what are the steps how to change the house title to my husband’s name? The owners are his parents and both of his parents passed away. There is a living trust and it states my husband is the first successor and all assets of the estate shall be granted 100% to my husband. We’d like to know which forms to fill out and get notarized to take it to the County’s records office. Is that the ones youve listed?
    1. Affidavit of death
    2. Grant Deed
    3. Claim of reassessment exclusion
    4. Preliminary change of ownership form

    Is there another step we need to do? The property has a mortgage and do we contact the lender to discuss the loan because we are taking over payments.