FOR THE RECORD!
Who Prepares Your Document is Important. Here’s why. Consider this story:
A couple buys a home. This is likely the single biggest and most important purchase of their lives together. After a few years they have children. As concerned parents, they want to make sure that, should tragedy befall either one or both of them, the asset that they hold will go to benefit their children, without being reduced by the need for Probate. They decide to put their home into a Trust.
Correctly, they have the Trust prepared by an experienced estate planner and/or attorney. They now need to fund the Trust by putting the home into the Trust as an asset. They need a Deed. So, they consult the internet and find, they can probably do it for themselves, for very little money!
They obtain the form, and do their best to complete it according to advice they receive on YouTube. They sign the Deed and have it Notarized and send it to the County Recorder for recording in the County Record. They receive confirmation of the recording. Hooray, they have successfully completed the process!
Life is good, and, a few years later, as interest rates have declined, they decide to refinance this home. They find the perfect loan and they enter escrow. As usual, a title search is done. Unfortunately, the title company reflects “the effect” of their Deed in the Preliminary Report. Upon inquiring, they are told “there is a defect in the Deed into your Trust.” What is the defect? It conveys the property into their Trust, without mention of the Trustees. This is problematic in that, in the State of California, a Trust is not an entity capable of legally acquiring or holding title to real property. The Trustees must hold the title on behalf of the Trust.
Upon being advised of this fact, the couple seeks the help of the Escrow Company to draw a new Deed correctly putting the Trust in title. However, since the Escrow Company is only handling a refinance transaction, for liability reasons, they are not able to draw a Deed outside of escrow to correct the title issue.
The problem described is fairly easily resolved, as both of the Trustees are still living. As a matter of fact, this situation is unbelievably common. But what if fate is not so kind and many years pass and both parents, the Trustees, are deceased? Does the Deed actually convey title to the Trustees or their Successors? Probably not. A type of Probate case called a Heggstad Petition will likely be required to remedy the issue and confirm title in the Trustees. This can be an expensive and time intensive procedure requiring legal representation.
This is a story of only one type of issue that can be created by the preparation of a party inexperience with real property documentation and its preparation. Many of these stories end the same way, with the Court. Avoid these issues. Have your documents prepared by a professional.