Transferring Title Without A Deed.

Transferring Title Without A Deed – Executing and recording a deed is the standard way to transfer title to real property.  Doing so puts the world on notice as to the change in ownership.  Nonetheless, in the absence of a deed, courts may still, under the right circumstances, grant petitions to confirm title to real property as a trust asset based on the trust documents alone.

A so-called “Declaration of Trust” is established when the settlor(s) declares that they as trustee(s) hold certain assets that they transferred into their Trust.  These assets are specifically listed on an attached Schedule of Initial Trust Assets.  A Trust Agreement, unlike a Trust Declaration, involves someone other than the settlor(s) acting as Trustee(s) from the commencement.  Thus, no declaration by the Settlor that they are holding their assets as trustee(s) is made.  A Trust Agreement may also include a Schedule of Initial Trust Assets.

Since the 1993 landmark Estate of Heggstad, (1993) 16 CA4th 943, court decision, now anytime a settlor of a Declaration of Trust dies without having formally deeded title to assets that are specifically listed in a trust’s schedule of assets, the successor trustee petitions to confirm that title belongs to the trust; provided these assets were not transferred before the settlor died.  Under Heggstad, it is often sufficient for a Settlor of a Declaration of Trust to have listed an item of real property on an initial asset schedule attached to the trust document in order for the court upon petition to transfer title to such asset.

More recently, in 2015, the court in Ukkestad v. RBS Asset Finance, Inc., (2015) 235 CA4th 156, allowed title to real property to be transferred into a deceased owner’s Declaration of Trust under a petition even though the properties were not specifically identified in the trust document or its attachments.  In Ukkestad the settlor had declared in the Trust that all of his “right, title and interest” to “all of his real property” were included in the Trust’s assets.  Establishing what “real property” belonged to the settlor, and thus subject to the Declaration of Trust, was determined by what real property was still titled in the decedent’s name.

Now, the court in Carne v Worthington, (2016) 246 CA4th 548, has allowed the schedule of assets to a Trust Agreement to act as an instrument of conveyance.  In Carne the decedent had a Revocable Declaration of Trust (“Revocable Trust”) and a subsequently created Irrevocable Trust Agreement (“Irrevocable Trust”).  Title to the decedent’s real property was held in the Revocable Trust but was also later listed as an asset in the Irrevocable Trust’s schedule of assets.

The court held that title to the real property was transferred to the newer Irrevocable Trust when the decedent (while still alive) signed the Irrevocable Trust because it specifically included, on an attached schedule of trust assets, even though the same real property was still titled in the decedent’s name as trustee of his Revocable Trust.

That the decedent, while alive, had not deeded the real property from himself, as trustee of his Revocable Trust, to the Trustees of the Irrevocable Trust did not matter, as far as whether title was transferred.  The Carne court acknowledged, however, that the absence of a recorded deed could well have mattered had the decedent’s creditors protested that they were not aware of the transfer.

The point in Carne is that the decedent, while alive, as the settlor of his Revocable Trust, both had the authority to transfer title to the real property from that Revocable Trust to his Irrevocable Trust and had specifically listed the property as an asset of the Irrevocable Trust, itself a Trust Agreement.

Court petitions are avoided and money, time and aggravation spared when deeds are used.  However, if necessary, such court petitions can prevent an unintended probate and/or ensure the decedent’s intended distribution of assets.