Huntington Beach, California Attorney, Mark W. Bidwell

Services provided for Trust owning one real property.

Attorney review of the trust

Notice to beneficiaries of trust and heirs as required by California Probate Code Section 16061.7

Prepare and file "Change in Ownership Statement, Death of Real Property Owner" 

Prepare Form SS-4 and file with the IRS for Federal Tax Identification Number

Prepare and record Affidavit Death of Trustee with County recorder for one house or real property

Prepare and record Notice of Death with County Recorder

Prepare and record parent to child exclusion Form with the County Recorder

Trust transfer (quit claim) deeds out of trust into names of beneficiaries and Preliminary Change of Ownership Report

California Real Estate Property Post Death Trust Transfers 

Two documents are needed to transfer California real property from a trust to beneficiaries of the trust; a deed and an ‘affidavit of death of trustee.’  An ‘affidavit death of trustee’ is a declaration, under oath, by the successor trustee. The successor trustee declares the owner has died and attaches a certified copy of the death certificate. The successor trustee further declares he or she is authorized to take control of the real estate property.

The affidavit is filed with the county recorder where the real property is located.  It is now of public record the successor trustee has the authority to take control of the real property. Control is limited to what is directed in the trust. Typically, the trust directs the successor trustee to distribute the real estate property to individuals identified in the trust.

Distribution is be either sale of the real property or transfer of ownership. If the successor trustee sells the property, the affidavit death of trustee is all that is required. Escrow and title will use the affidavit as the successor trustee’s authority to sell the property.

Ownership transfer of real property is by deed out of the trust to the beneficiaries of the trust. The deed must conform to format requirements of California law and contain a legal description. An example of wording is “John Doe, Successor Trustee to the Smith Revocable Trust grants to Jane Smith and Joe Smith real property located in the State of California, county of ….”

A “Preliminary Change of Ownership Report” is required with each affidavit and deed. This “report” provides additional information and is submitted with the deed. This “report” is not recorded.

Two additional documents may be needed with the affidavit and deed. If an exemption exists to the $75 tax imposed by Senate Bill 2 – Building Homes and Jobs Act, a cover sheet citing the reason is placed in front of the deed. Some counties in California have an additional county specific document that is an affidavit stating the reason no transfer tax is due. 

Two documents are needed to transfer California real property from a trust to beneficiaries of the trust; a deed and an ‘affidavit of death of trustee.’  An ‘affidavit death of trustee’ is a declaration, under oath, by the successor trustee. If the successor trustee sells the property, the affidavit death of trustee is all that is required. Ownership transfer of real property is by deed out of the trust to the beneficiaries of the trust.

Article written by Mark W. Bidwell. Office is 4952 Warner Avenue, Suite 235, Huntington Beach, California, 92649. Telephone is 714-846-2888. Email Mark@BidwellLaw.com.

Sucessor Trustees Duties and Obligations

Successor Trustees to a decedent’s trust have duties and obligations. These obligations are; file tax returns, notify beneficiaries, notify the county, pay bills and debts, account and distribute assets of the trust. Legal services for successor trustees is provided by Mark W. Bidwell to meet these legal obligations

Successor Trustees need a bank account to make deposits and pay debts of the estate. Banks will require a Federal Tax Identification Number, also known as Federal Employer Identification Number (FEIN). A tax number can be obtained online at the IRS website.

A tax return from the date of death to the close of the estate is needed for each year the trust has assets. The return is Form 1041 and is filed on the tax number used to open the bank account. In addition to 1041 returns a final return from the beginning-of-the-year to date-of-death is filed on Form 1040 under the decedent’s social security number.

The Successor Trustee is required to notify heirs of the decedent and beneficiaries of the trust in a format and manner proscribed by California law.  Requirements of the notice are in California Probate Code Section 16061.7. The wording and format is very specific. For example the law directs which section has to be in at least 10-point boldface type. This notice also serves to establish a statue of limitations on when the trust can be challenged.

The Successor Trustee is required to notify the death to each County where the decedent owned real property. Notice is sent to the assessor’s office of the County.  The notice is titled “Change in Ownership Statement Death o Real Property Owner.” The form comes with a warning: “Failure to file this statement will result in the assessment o a penalty.”

Unlike the notifications an accounting is not a legal requirement unless a demand is made by a beneficiary of the trust. But good practice is to provide an accounting. An accounting of assets and debts, income received and debts paid provides transparency and minimizes second guessing of the Successor Trustee’s actions.

The final duty of the Successor Trustee is to distribute assets of the trust. Real property requires filing of an affidavit of death of trustee and a quit claim deed with the County Recorder. The affidavit of death puts the County on notice the owner has died and the name of the Successor Trustee who has authority to transfer the property. The Successor Trustee signs a quit claim deed to transfer ownership out of the trust and to the beneficiaries of the trust as directed in the trust document.

Good practice is for the Successor Trustee to obtain an appraisal on the property as of date of death. The basis to the new owner is the fair market value of the real property.  This is a known as a step-up in basis. Capital gains tax is on the difference between sale price and the date of death market value. An appraisal is needed for any IRS audit.

Any real property distribution to a child of the decedent qualifies for Proposition 13 parent-to-child property tax exclusion. A claim for reassessment exclusion must be filed within 3 years of transfer. Good practices suggest not putting this off and submitting it once the quit claim deed has been recorded.