Legal Question in Real Estate Law in California

Under current tax laws, the surviving spouse would get a step up in cost basis, the same as they would if title had been held with CPWPOS.

This could change if Congress does away with the estate tax exemption.

A trust isn't really completely "set up" until it is funded. Funding a trust means putting some assets into it. If the trust is appropriately worded, meaning among other things that both of you are trustees and beneficiaries, then you could direct your escrow holder to take title in the name of the trust, and the escrow holder's officers will know how to draw up the paperwork. I am, however, a little bit concerned that you may have written the trust yourselves, and if so, it may be an inappropriate type of trust for you.......so have it reviewed by a trust attorney, if you have not done so already. A properly drafted and funded trust will accomplish your intentions including step-up in tax basis and avoidance of probate. The wrong kind of trust or improper funding (placement of assets) will create future headaches.