Legal Question in Real Estate Law in California

Re: foreclosure

This is not so much a legal question as it is a matter of the internal policies of the various credit bureaus.

Technically, the estate is liable for the mortgage, and if the heirs and trust beneficiaries help themselves to bank balances, jewelry, vehicles, furniture, etc. and neglect the estate's obligations, the mortgage man is probably being short-changed, but his only remedy is (usually) foreclosure on the collateral.

Institutional lenders and credit bureaus are sufficiently close-knit so that foreclosures are routinely reported, but when the identities of the successor trustee and beneficiaries are not in the public record, it's far from certain that their names will be ascertained, and if they were, how the bureaus would use the information, if at all.

Note also that as long as the house is trust property, decisions regarding it including letting a default and foreclosure occur will be ascribed to the trustee(s) and should not affect non-trustee beneficiaries, in my opinion.

Re: foreclosure

Probably not. The contents of a living trust are not public record, meaning there is no way for the creditors of an estate to ascertain who the trust beneficiaries are without some extensive investigation. The most the creditors may due is sue the estate, i.e. the trust. The creditors may obtain a judgment against the trust. Then they would have to discover the beneficiaries and prove the beneficiaries received assets from the trust and then sue the beneficiaries for a fraudulent conveyance. It is very unlikey that any creditor is going to go through all the above steps, as the legal costs would be quite prohibitive. This is one of the main reasons people create living trusts, to protect their beneficiaries from creditor's claims.