Trust Issues: Real Estate IS Different

Many Californians have their assets protected with a Revocable Living Trust. It's a great way to preserve and assign assets, especially for keeping family wealth in the family by legally avoiding probate. When it comes to selling real estate owned by a Trust and depending on other factors, unexpected issues may be lurking... and could put a wrench in the transaction. This is especially important in today's market where competition for a limited number of qualified buyers is high. It's wise to address potential issues BEFORE they threaten to unravel a deal in escrow.

Disclosure: I'm talking Real Estate here, as an agent for Sellers and Buyers. I AM NOT a lawyer.

I have tremendous respect for those working in the legal profession, and especially those working on the behalf of consumers, protecting and upholding our rights of property ownership in this country. Here I simply want to talk about a recent real estate experience I had with Trust Seller clients. They were confident that the Durable Power of Attorney for All Assets, prepared by their family's legal firm, was sufficient for their objective: to sell real property held in title by their family (living) trust.

The clients are sophisticated people, their attorney, experienced, and yet when it came to selling a property owned by the Family Trust.... the title insurer required MORE.

Thus, Real Estate is Different. Read on.

The Family Trust Sellers believed they were prepared to sell the property because

• Successor Trustee was also the surviving spouse of the living Trust AND
• Successor Trustee assigned Durable Power of Attorney for All (Trust) Assets to the next Successor Trustee 

The Seller parties to the Trust expected that all was in order, having been prepared by their attorneys well in advance of listing the property for sale. The Survivor (spouse) of the Trust moved away after assigning the next-in-line Trustee identified in the Trust to manage, reinvest or liquidate any assets held in the Trust for the benefit of the Trust. The Durable P.O.A. was for "all assets" and indeed, a variety of assets were identified; investment accounts, bank accounts, and real estate owned by the Trust. It was expected that the real property, in this case the Survivor Trustee's primary residence, was included.

And yet, all this diligent preparation was not enough for the Title Company to insure title because

Real Estate is Different!

A contract of sale was made and escrow opened. Title Company required a Substitution of Successor Trustee for the sale of this particular property in order to insure title. Really?

Shouldn't that all-encompassing Durable Power of Attorney for All Assets have covered this?

Well, according to the Title Company - the required insurer of ownership of real property (for real estate sales in California)-- uh, No. Durable Power of Attorney for All Assets.... not enough!

The result for the Sellers in this case basically amounted to a "do-over" with considerable inconvenience and frustration to them. They'd anticipated that the Durable Power of Attorney would cover the transfer of title of real estate to the next-in-line Successor Trustee, alleviating that burden from the primary Successor (in this case, the surviving spouse of the Trust, who had already relocated) from further responsibility. Instead, additional time, travel, and notary costs were incurred in order to meet the requirements of the Title insurer to complete the sale and ultimately transfer title of the property to the new owners.

Not every sale of real property held in title of a trust will experience the scenario just described. I bring this to the attention of those who may have assignment as Successor Trustee/s for a Living Trust and for their consideration. I advise consultation with an attorney for legal advice in any matter. Should questions remain regarding real property sale process and requirements for successful sale of real estate owned in a living or family trust in California, consult an experienced, professional Realtor®.

You can do that without leaving this page.....I invite questions and comments and am here to assist. You can also call me: 310-433-3349.


I am a fan of the California Living Trust. I've represented too many probate sales and witnessed the results (i.e., in a probate sale, most often the greater amount of proceeds are paid to the State, and heirs divvy up the remainder...) to have any other opinion. For the majority of Californians that own their homes, the real estate that they own, most commonly their home, is their greatest financial asset. I am continually amazed that after four decades of the California Living Trust provision, there are still California homeowners (and/or their heirs) that have not  bucked up the nominal legal fee to set up a Living Trust and avoid state probate.

If you don't have a Living Trust and need more information, contact a good trust attorney for details. If you don't know a trust attorney, contact me and I'll be happy to refer you to a reputable attorney with experience.

If you do have a Living Trust, or are involved as a successor trustee to a living trust, you should know that Real Estate is Different from other assets when the Trust goes to sell that real estate in California.