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Trust Law/Level VII · Property and business/7.1 Land/Lesson 6

Deeds, title insurance and trust ownership

Which deeds move land into a trust, what recording does, how ALTA owner’s policies treat a transfer to the insured’s trust, and California’s reassessment rules.

Education, not legal advice. Trust law changes from country to country and state to state, and the right structure depends on your situation. Anything you sign should be drafted or reviewed by a qualified lawyer where you live.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Before deeding a home into your own trust, read the owner’s title policy: the 2006 and 2021 ALTA forms keep a trustee of your estate-planning trust insured, so no new policy is usually needed.
  2. A deed into your own trust can be exempt from transfer tax; Illinois, for example, exempts deeds with consideration under $100 (35 ILCS 200/31-45(e)). Recording fees still apply, and only recording protects against later buyers.
  3. In California a transfer into a revocable trust is not a change in ownership (Revenue and Taxation Code §62(d)), so no reassessment follows; the change comes when interests pass to others at death.
  4. The Proposition 19 parent-child exclusion covers the home’s taxable value plus $1,044,586 for transfers from 16 February 2025 to 15 February 2027, only if a child claims the homeowners’ exemption within 1 year.
  5. A quitclaim deed is cheapest for funding your own trust but carries no warranties; also confirm the homestead exemption survives, as in Florida, which accepts a lifetime beneficial interest (Fla. Stat. §196.041(2)).

MaterialsA recorded deed into a trust, from a county recorder’s public search, showing the grantor and the trustee as granteeThe definition of ‘Insured’ in the ALTA owner’s policy forms of 2006 and 2021, free from alta.orgThe California State Board of Equalization’s Proposition 19 page (boe.ca.gov/prop19)

Wonder

  1. Does a title insurance policy still protect an owner after the house is deeded to the owner’s own trust?
  2. Why does the kind of deed matter when an owner is only moving land into their own trust?
  3. Can moving a home into a trust change its property tax in some states?

Explore

  1. A deed transfers land. A general warranty deed promises good title against everyone’s claims; a special warranty deed promises only against defects arising while the grantor owned it; a quitclaim deed passes whatever interest the grantor has with no promises. California commonly uses a grant deed. To fund a trust, an owner usually signs one of these naming the trustee as grantee. A trustee’s deed is normally used later, when the trustee conveys the land out of the trust. This lesson explains these rules; it does not suggest any particular deed or trust.
  2. Recording the deed in the county land records gives public notice of the transfer. Under state recording acts, it protects the new owner against later buyers and lenders who rely on the records. An unrecorded deed is generally still valid between the parties, but it may not hold up against such third parties. Recording fees, transfer taxes and their exemptions for transfers into one’s own trust vary by state and county.
  3. An owner’s title insurance policy protects against covered title defects. The 2006 ALTA owner’s policy extends the definition of ‘Insured’ to a grantee under a deed delivered without valuable consideration if the grantee is a trustee or beneficiary of a trust created in writing by the named insured for estate planning purposes. The 2021 ALTA owner’s policy covers a trustee or beneficiary of a trust established for estate planning by an insured, without the no-consideration condition. In both, the insurer keeps the defences it had against the earlier insured.
  4. Policies issued on older forms may not include this wording, and some states use their own forms. Whether a particular policy continues after a transfer depends on its form and terms, and title insurers can say whether an endorsement is available. Lesson 3.1.2 lists this check as part of funding a trust.
  5. Some states reassess property tax when ownership changes. California’s Proposition 13 (1978) limits the general property tax rate to 1% of assessed value and annual increases in assessed value to 2%, with reassessment on a change in ownership. Under Revenue and Taxation Code §62(d), a transfer into a revocable trust, or into a trust of which the transferor is a present beneficiary, is not a change in ownership. When the trust becomes irrevocable at death, interests passing to others can be a change in ownership.
  6. Proposition 19, approved by California voters on 3 November 2020, narrowed the parent-child exclusion for transfers on or after 16 February 2021, including transfers from a trust at a parent’s death. It now covers a family home or family farm, and a home qualifies only if the child makes it their principal residence and claims the homeowners’ exemption within 1 year. The exclusion is limited to the home’s taxable value plus an inflation-adjusted $1 million ($1,044,586 for transfers from 16 February 2025 to 15 February 2027). Homestead exemptions in other states have their own rules for homes held in trust.

Key facts

  • Warranty, special warranty, grant and quitclaim deeds can move land into a trust; a trustee’s deed is normally used when the trustee conveys land out.
  • Recording gives public notice and protects the owner against later buyers and lenders; an unrecorded deed is generally still valid between the parties.
  • The 2006 ALTA owner’s policy treats a trustee or beneficiary of an estate-planning trust set up by the named insured, receiving a deed without valuable consideration, as an insured.
  • The 2021 ALTA owner’s policy covers a trustee or beneficiary of an estate-planning trust established by an insured, without the no-consideration condition.
  • In California, a transfer into a revocable trust is not a change in ownership for property tax (Revenue and Taxation Code §62(d)).
  • California’s Proposition 19 limits the parent-child exclusion, from 16 February 2021, to a family home or farm, with a value limit for a home.

Exercise nine, six, three, one

9CollectList up to 9 facts from a recorded trust deed, a title policy or this lesson (some sources give fewer), such as the deed type, the grantor and grantee, the recording date, the title policy form and any property tax exclusion claimed.
6ClusterSort them into 6 categories: the deed, recording, title insurance, property tax, state-specific rules, and facts you are unsure about.
3DistillReduce the 6 categories to 3 groups: facts that change title, facts that affect coverage, and facts that affect tax.
1CrystallizeWrite 1 sentence explaining, in your own words, why the form of an owner’s title policy matters when the land is deeded to the owner’s trust.

Fact check

Dates, figures and claims checked against the published sources listed below.

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