Is Your Home in a Living Trust? Why California Homeowners Should Pay Attention

If you own a home in California, especially in an area like Santa Clarita or Los Angeles County where property values can easily reach $1 million or more, there is something important you should think about:

What happens to your home when you pass away?

It’s not a comfortable subject, but a little planning today could potentially save your family a lot of time, money and stress later.

What Happens if Your Home Is Not in a Trust?

Depending on how you hold title and what other estate-planning arrangements you have, your home could become part of a probate proceeding after your death.

Probate is the court-supervised process used to administer an estate, pay applicable debts and expenses, and ultimately transfer assets to the appropriate beneficiaries or heirs.

That can mean court proceedings, legal paperwork, expenses and delays before your family can sell or transfer the property.

And here's something many homeowners don't realize:

Having a Will does not automatically keep your home out of probate.

Probate Can Get Expensive

California allows statutory compensation for ordinary services performed by the attorney handling a probate estate and by the personal representative — sometimes called the executor or administrator.

The calculation is generally based on the gross value of the probate estate, rather than simply the equity remaining after the mortgage.

That distinction can be significant for California homeowners.

Here's a simple example:

Let's say a home included in the probate estate is valued at $1,000,000.

Using California's statutory compensation formula, ordinary compensation could be approximately:

Attorney: $23,000
Executor/Administrator: $23,000

That's approximately $46,000 combined.

And that may not be the end of the expenses.

Depending on the estate, there can also be court filing fees, probate referee/appraisal fees, publication expenses and other administrative costs. Extraordinary services, when necessary and approved by the court, can also result in additional compensation.

Of course, every estate is different, and not every estate will incur all of these expenses.

What Does a Living Trust Do?

A properly prepared and funded revocable living trust can allow assets held by the trust, including a home, to be managed and ultimately transferred according to the trust instructions without going through the traditional probate process for that asset.

Instead of waiting for the probate court to administer the property, the successor trustee can generally step in and follow the instructions established in the trust.

A trust can also be helpful during your lifetime if you become unable to manage your own affairs.

Creating the Trust Isn't Enough

This is one of the most important things homeowners need to understand.

You can have a beautiful trust document sitting in a drawer and still have a problem if your home was never properly transferred into the trust.

The property generally needs to be properly titled in the name of the trust.

If you already have a Living Trust but aren't sure whether your home was actually transferred into it, this is something worth checking with your estate-planning attorney.

What About a Will?

A Will is an important estate-planning document, but a Will by itself generally does not avoid probate.

A Will tells the court how you want certain assets distributed. A properly funded Living Trust can provide a mechanism for assets held by the trust to pass outside the traditional probate process.

There are also other ways property may transfer outside probate depending on how title is held and the owner's circumstances, so a Living Trust isn't automatically the right solution for everyone.

Protect the Home You've Worked So Hard For

For most families, their home is one of their largest assets.

We spend years working to buy it, paying the mortgage, maintaining it and watching its value grow.

It makes sense to spend a little time making sure you understand what will happen to that property when you're no longer here.

Planning isn't just about protecting the house. It's about making things easier for the people you leave behind.

If you aren't sure how your home is currently titled, I can help you obtain the property information so you can review it with your estate-planning attorney.

For questions about creating a Living Trust or determining the best estate plan for your family, please speak with a qualified California estate-planning attorney.

Mariness Chata | REALTOR®
RE/MAX of Santa Clarita
📞 661-317-3332
📧 RealtorMariness@gmail.com

This article is provided for general educational purposes only and is not legal, tax or estate-planning advice. Probate requirements, costs and available alternatives depend on the individual circumstances. Consult a qualified California attorney and tax professional regarding your situation.