In California, which deed does an estate planning attorney MOST commonly use to transfer a client's home from the client individually into that same client's revocable living trust?
Correct Answer
B) Grant deed, captioned a trust transfer deed, because it keeps title insurance running to the trustee
California attorneys move a residence into the owner's own revocable living trust with a grant deed, normally captioned a trust transfer deed. The grant deed carries the two covenants implied by Civil Code section 1113 (that the grantor has not already conveyed the same estate and that the estate is free of encumbrances made by the grantor), and title insurers treat that grant as continuing the owner's existing policy coverage in favor of the trustee. A quitclaim passes only whatever interest the grantor happens to hold at that moment and can put that continued coverage in question, which is why it is the do-it-yourself route rather than the drafted one. The choice of deed does not change the tax result: a transfer to a revocable trust in which the transferor remains the present beneficiary is excluded from change in ownership under Revenue and Taxation Code section 62(d).
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Related Topics & Key Terms
Key Terms:
Related Concepts
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
A title search is an examination of public records to determine the history of ownership, liens, encumbrances, and other interests affecting a property. It verifies that the seller has the legal right to transfer the property.
A transfer tax is a tax imposed by state, county, or local government on the transfer of real property from one owner to another. It is typically based on the sale price or a flat rate per dollar of consideration.
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Which of the following risks is excluded from BOTH a CLTA standard title insurance policy AND an ALTA extended title insurance policy?
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A first-time homebuyer in California asks her agent what a title search is designed to accomplish. The agent explains that the title search is conducted to: