California Transfer Upon Death Deed

[TrustUser]

i am considering flipping some properties. i do not want to go thru the hassle of creating a new trust for every property.

can my beneficiary be a trustee ?

i would like to have one trust created, and then just use that as my beneficiary for all properties that i flip

 

[justalayman]

Typically with a revocable living trust, if that is your vehicle of choice, the grantor is the trustee. That allows them to retain control and regain title if they choose to remove the property from the trust without issue.

But to your question , yes, the beneficiary can also be the trustee. If there is more than one beneficiary it may cause some strife and issues in general if the other beneficiaries believe the trustee is controlling the trust in a manner to benefit themselves rather than all of the beneficiaries. If it is a lone beneficiary, that issue is not present of course.

 

[TrustUser]

thank you. it would only go into effect, if i die. so i will have it titled, "trustuser, a single man". and then in the beneficiary section it will be trustee of the abc trust. it will only be one trustee.

i do make separate trusts for any property that i intend to hold onto, long-term. but something that comes and goes in 3-6 months - i want to make it easy for myself.

 

[adjusterjack]

Are you paying cash for the properties or borrowing money to buy them?

I have a reason for asking.

 

[TrustUser]

paying all cash

 

[adjusterjack]

Then it should be a simple matter to create a single trust to buy and sell the properties. You as trustee of the trust while you are alive with your beneficiary and secondary trustee as the same person who can just take it over when you die.

I don't see any reason for separate trusts for holding property long term, unless you plan to live in one and qualify for regular homeowners insurance.

The trust can buy a commercial insurance package policy with building coverage and liability. You add buildings when you buy them and delete them when you sell them.

The IRS makes taxes easy on you, too. From the IRS:

"Trusts must file a Form 1041, U.S. Income Tax Return for Estates and Trusts, for each taxable year where the trust has $600 in income or the trust has a non-resident alien as a beneficiary. However, if the trust is classified as a grantor trust, it is not required to file a Form 1041, provided that the individual grantor reports all items of income and allowable expenses on his own Form 1040, U.S. Individual Income Tax Return. Thus, the grantor/individual would pay the total tax liability upon the filing of his return for that taxable year."

 

[TrustUser]

i look at long-term properties much differently than just these ones that i may flip. the main reason i place each of them in separate trusts may or may not make much difference to me, when i am alive.

but lawsuits against one property can only affect that property, and not creep into other assets.

from a tax standpoint, it makes no difference to me - all of it is included on my 1040. i have never sold a short term (less than 1 year) property, so i dont know exactly where it goes. but i do know that it ends us as ordinary income, and not a preferential capital gain.

when i purchased my long-term properties, i did put them in separate trusts. however, it is definitely a bit of a hassle. title companies give me lots of grief. most of them now require the full trust document (along with the beneficiary). which i dont want to give them that info. i have found 1 title officer who will give me title insurance without going thru a bunch of hoops.

but now that california has a tod on real estate, the very simplest and cleanest thing i can do is title it in my own name, with the beneficiary listed as a trustee of a trust that i have already created

thanks to all who made comments !!

 

[justalayman]

I’m not understanding what protections you believe you are gaining from what you’re doing, especially given your last statement. If you are using a TOD to transfer the title into the trust at your death, the asset is exposed until your death.

If you are utilizing revocable trusts, you have no protections their either. Because they are revocable, they are viewed as your personal property for many issues. That means a suit against one property can reach your other revocable trusts due to the fact they are considered your personal property due to the revocable status of the trust.

 

[TrustUser]

yes, that is why i said there may or may not make any difference while i am alive.

 

[adjusterjack]

but now that california has a tod on real estate, the very simplest and cleanest thing i can do is title it in my own name,

I agree.

But you seemed to be exercising a preference for the trusts, which are cumbersome and expensive.

The liability risk is there no matter what you do, so you might as well use the TOD deed for each property. Costs nothing except the recording fee if you do it yourself (easy - and you can use the same format every time). And you can revoke it at any time and record a new one if you want to change beneficiaries.

with the beneficiary listed as a trustee of a trust that i have already created

I don't understand what you are getting at there.

The TOD would list just the beneficiary's name. It would have nothing to do with any trust and you wouldn't need any trusts at all if you have a TOD on each property.

 

[TrustUser]

what i wanted to do is use a tod, and title it in my name

the beneficiary would be the trustee of abc trust (a trust that i have already created)

so that if i died, while i owned some property that i was flipping, that property would automatically get placed in my trust - from which all directions on taking care of beneficiaries would be used

that way, as i think you are also stating, i would not be using any trusts for my flippers - which is what i want to avoid, due to the extra hassle

 

[adjusterjack]

the beneficiary would be the trustee of abc trust (a trust that i have already created)

so that if i died, while i owned some property that i was flipping, that property would automatically get placed in my trust - from which all directions on taking care of beneficiaries would be used

That seems cumbersome and confusing and is likely to delay transfer of the property until the terms of the trust are complied with. It would also require that the trustee execute a new deed transferring the property to the beneficiary. That adds to the attorney fees that the trustee has to pay to get it done right.

If you want any one person to inherit any one property (clean and simple), just name that person on the TOD (without any reference to any trust). Upon your death, ownership transfers automatically by law without the beneficiary having to incur any cost or delay.

That's the whole purpose of a TOD: Avoid probate and avoid trust administration.

You can even do it with properties that you are going to flip. You're going to own those properties for months, maybe, until you sell them. You can record a TOD as soon as your incoming deed on the property is recorded. If you die during those months, it's taken care of, clean and simple.

 

[TrustUser]

no one person is inheriting my property. i plan to keep it in trust, and distribute the income to my beneficiaries, while the corpus remains intact

at least while there is enough of a corpus to distribute amongst the beneficiaries (i am guessing a couple generations).

actually, i was hoping that a tod would be done on the property, as part of the purchase ? so that i did not have to do anything extra.

in other words, when the title company asks me how i want to take title, i wanted to ask them to prepare a tod deed for me.

 

[justalayman]

So you’re talking of trusts with multiple beneficiaries?

And you don’t intend the trust to be closed out and distributed immediately after your death?

 

[TrustUser]

i have my own trust that takes care of me. it has language in it for when i get incapacitated, etc. etc.

i also have a trust created for my beneficiaries, with only language in it that takes care of them.

i plan to have every real property in its own separate trust.

so when i die, i will have my beneficiary trust, with all the language in it for distribution

every real property that i own will be in its own trust. the sole beneficiary of each of these "property trusts" will be my beneficiary trust.

the reason for this is that after i die, these trusts are different legal entities. and a lawsuit against one property does not entangle the other properties.

all cash, loan investments, bank accounts, and other assets that do not have lawsuit potential will all end up in the beneficiary trust, when i die

and then i have a "flipper trust" that will accept any properties of mine that i am currently flipping. which may be no properties, with a possibility of 2 - i doubt i would ever be doing more than 2 at any one time. the flipper trust would be around for a short time - only until the property got sold. once sold, it would distribute the sales amount to the beneficiary trust. and within 6 months or so, the flipper trust would be eliminated.

my only purpose for this thread is to have a non-probate way of placing these assets into my trust, cuz i dont want to deal with it while i am alive.

i have never flipped a property before. i may do 1, and decide never to do it again. but i could also end up flipping 50 properties in my lifetime

which would mean i went thru the process of putting 50 properties in trust, only to have the last 2 do anything for me.

if i simply titled the flippers in my own name, i would have nothing extra to do. i just dont want to leave the possibility of properties going thru probate