Can You Leave Your California Home to Heirs While You’re Still Alive?

Throughout your life, you accumulate an abundance of personal property. While each item holds value, one of the most important investments is, no doubt, your home. Aging brings with it serious consideration about how it will be distributed to your heirs. Thankfully, you can leave your California home to heirs while you’re still alive. By completing a thorough estate plan with the help of a lawyer, you can ensure that your home is passed down according to your wishes.

While most people consider a will while estate planning, a trust can be a viable option for those who not only want to avoid probate but also would like to plan for any challenges that may arise during their lifetime.

Placing a Home in a Trust

A will is an opportunity to designate what happens to your belongings when you pass. It will determine to whom your personal property is distributed. Unfortunately, wills are subject to probate and become a matter of public record. For those who wish to bypass probate or keep their affairs more private, a trust can provide a useful option. It is also the most favorable option for those who wish to pass property, such as a home, to heirs while still living.

There are two important reasons why many people place their homes in a trust. First, as mentioned, the process avoids the probate process. This provides a seamless transition of ownership to the designated heir upon death. Second, you can pass your home to an heir through a trust while you are still living, should you become incapacitated in some way.

Under California law, a person is deemed incapacitated when they lose their ability to care for themselves due to mental deficits or are deemed not to be of sound mind and body. When someone is incapacitated, whether temporarily or permanently, decisions still need to be made on their behalf. This can include medical decisions, as well as decisions about property and finances.

In a living trust, when a person is incapacitated, the designee must ensure that the trust is carried out and that decisions about the trust protect it from harm.

What Qualifies as Incapacitation?

When a person is legally incapacitated, they must meet certain criteria. These criteria can include:

• There is a lack of communication or understanding with others.
• They no longer have the ability to understand the consequences of their actions.
• There is a lack of understanding and recognition of those with whom they have a close relationship.
• There is an inability to control moods, or actions become inappropriate.
• Decisions are no longer made logically.
• Hallucinations or thoughts of delusions occupy the mind.

In some situations, these symptoms can be obvious, but in others, they may be more disguised. Advanced Alzheimer’s or dementia represents a more evident form of incapacitation. When it is not obvious, there is a legal path to prove incapacitation in order to ensure that the rights and wishes of the person are protected.

Creating a Living Trust

Trusts allow for a legal way to hold assets until a certain, predetermined time. They also provide more flexibility in how assets are disseminated. Under a trust, assets can be distributed when a beneficiary meets the terms of the trust. This could designate a milestone in life, an age, or immediately upon death as the moment that assets are distributed. Therefore, a trustor could choose to have a home transferred to their beneficiary upon the meeting of any of these conditions.

To successfully pass the home to an heir, the deed of the home must be prepared with the heir identified. In addition, all paperwork and fees must be filed with the court. This process will require the help of a notary, who will validate all the documentation.

FAQs

Q: What Is the Property Inheritance Law in California?

A: The Property Inheritance Law in California governs what happens to personal property in the event that someone passes without a will or trust. In that case, the law dictates how the heirs receive property. Because California is a community property state, unless otherwise noted, a spouse is entitled to all property gained during the course of a marriage if their spouse passes.

Under this law, a variety of scenarios could occur. Property could go to children, spouses, parents, or other relatives.

Q: How Do I Keep My Property in the Family Forever in California?

A: One way to work toward keeping your property in the family forever in California is by establishing a Qualified Personal Residence Trust. In this type of trust, the home is signed over to the trust itself while the grantor is still living in it. Once the specified time identified in the trust has passed, the ownership can then be transferred to the designated beneficiary.

Q: What Is the Heirs Property Act in California?

A: Under the Heirs Property Act in California, if a person passes without designating the heir to whom property should go, the law views heirs as tenants in common. This means that the heirs have the right to receive the property. Unfortunately, there are many complications that can arise during this process. It is most effective to consult an attorney to ensure the property is protected if you find yourself in this situation.

Q: Is There an Inheritance Tax on a House in California?

A: There is not an inheritance tax on a house in California. If, however, the person from whom the property is received was living in another state, then the property may be subject to that state’s inheritance laws. It is always important to consult with an attorney who can help identify whether inherited property is subject to tax.

Estate Planning Attorney in California

Estate planning can be a difficult and complicated process, particularly when the goal is to keep specific assets in the family privately and without tax penalties. If you have a home that you would like to pass to your loved one while you are still alive, or if you have questions about the estate planning process, contact Robert G. Petrovich, Attorney at Law, and let our estate planning attorney help.