Legal Question in Wills and Trusts in California

Re: Living Trust - Encumbered property

You're overcomplicating things.

First make sure that the deed of trust executed by the Settlor in favor of beneficiary B has already been recorded.

Next, record an affidavit of death of trustee indicating that the settlor has died and you are now the settlor (you'll need to record the death certificate with it).

I'm assuming that the deed of trust executed by the Settlor in favor of Beneficiary B has already been recorded. If it has not, ignore the rest of what I'm saying here.

Third (if the Deed of Trust has been recorded), prepare an Assignment of Deed of Trust from the settlor to Beneficiary B. You, as Trustee, can sign the assignment. That way Beneficiary B retains his "priority" against other possible creditors lurking out there that you don't know about.

Fourth, you as trustee prepare a grant deed or a trust transfer deed from the trust to Beneficiary A. Include a Prop 58 (parent-child exclusion) form and a PCOR indicating it's a parent-child transfer. You'll probably need to give the assessor's office a copy of the trust - most counties are requiring that now when you submit a Prop. 58 form.

I would not take this step until I was sure that the ORIGINAL deed of trust (the one between the Settlor and Beneficiary A) had been recorded, though!

Finally, record the Affidavit of Death of Trustee, then the Assignment of Deed of Trust and then the deed (hand the Affidavit to the recorder first, then the assignment & finally the deed).

This information is not intended to substitute for professional legal advice and does not create an attorney-client relationship. You should accept legal advice only from a licensed legal professional with whom you have an attorney-client relationship.