Funding a Trust and the Preliminary Change of Ownership Report

If you create a living trust, you need to "fund" the trust.  That means you have to put things "into" the trust.  This doesn't occur by magic.  You can't just create a trust and go about your life without taking the time to put your assets into the trust.  You do so by actually changing title to the assets.  You need to go to the bank and change title to your accounts.  The accounts will no longer be in your name, but in the name of the trust instead.  That requires time and paperwork.   The same holds true for any real estate you have.  You have to sign a deed which puts the real estate in the name of your trust.

For example, let's say you hold title as "Mary Smith and John Smith, husband and wife as joint tentants."  In fact, that is how most married couples hold title to their real estate.  When funding your trust, you should sign a new deed (most lawyers will help you with this) which places the house in the trust.  Therefore, your new deed would say something like, "Mary Smith and John Smith, husband and wife and joint tenants, hereby grant to Mary Smith and John Smith, trustees of the Smith Family Trust, dated March 30, 2013 the following real estate..."  Then you have to file the deed with the county recorder's office.  Now, the house (or whatever real estate) is "in the trust."  

When you transfer a parcel of real estate into a trust, you are actually "transferring" the asset. The transfer will trigger a reassessment of your property taxes if you're not careful. Therefore, you need to file a Preliminary Change of Ownership Report (PCOR) with the county tax assessor's office.  The PCOR let's the assessor's office know about the transfer and prevents the real estate from being reassessed provided the transfer falls under one of several allowable exclusions.  The most popular "exceptions" are transfers between a husband and wife and transfers to a living trust.  Therefore, you can't just file the deed with the county, but you also need to find out if filing a PCOR would be prudent.  In most cases, you need to file one.

If you need help creating an estate plan for your family, contact Robert Mansour's office at (661) 414-7100.  Robert serves Santa Clarita, Valencia, Saugus, Canyon Country, Newhall, Castaic, Stevenson Ranch and surrounding areas.