Trust Transfer Deed Planning Guide

What Is a Trust Transfer Deed?

A trust transfer deed transfers real estate into or out of a living trust so that the property avoids probate. It’s the legal document that connects the property to the estate plan. The deed retitles ownership from an individual’s name into the trust’s name, ensuring that the trust—and not the probate court—controls what happens to the property after death.

How a Trust Transfer Deed Works

Trust transfer deeds are used in trust funding—the process of retitling a person’s assets to work with his or her estate plan. Unlike other estate-planning deeds—such as TOD deeds, lady bird deeds, or life estate deeds—a trust transfer deed isn’t a standalone planning document. It works with a trust that already exists. The trust establishes the plan; the trust transfer deed transfers the property so that the plan actually functions (usually to avoid probate).

The purpose of the trust funding deed is to take the real estate out of the owner’s name and place it in the name of the trust. Once title is transferred, the property is no longer part of the owner’s probate estate, and probate is not required to handle it.

Many people create a trust but forget to transfer their property into it, resulting in an “unfunded” estate plan. A trust only controls assets that are titled in the trust’s name, so an unfunded estate plan doesn’t achieve its purpose.

When to Use a Trust Transfer Deed

Trust transfer deeds have a single purpose: transferring property into or out of a living trust. They are used when setting up or updating an estate plan. The deed links the property to the trust so that it is controlled by the trust’s terms.

Other Names for Trust Transfer Deeds

“Trust transfer deed” describes what the document does—it moves property into or out of a trust. It’s sometimes called a “trust funding deed” or simply a “deed to trust.” All of these terms refer to the deed’s function.

The same deed can also be identified by its warranty of title instead of its function. A trust transfer deed may take the form of a quitclaim deed, warranty deed, or special warranty deed, depending on the level of protection it provides. For example, if the deed transfers property to a trust with a full warranty of title, it may be called a “trust transfer deed,” a “warranty deed,” or a “trust transfer warranty deed.” The name matters less than the document’s language.

California Trust Transfer Deeds

In any state, a deed that transfers property into or out of a trust can be called a “trust transfer deed.” But the name has specific significance in California. California law recognizes that, when a grantor transfers property to the grantor’s trust, there is no gift or sale. The grantor simply changes the way title is held and remains the same beneficial owner before and after the transfer.

Under California Revenue and Taxation Code § 62(d), transferring property into or out of a revocable living trust—where the transferor remains the present beneficiary—is not a change in ownership for property-tax purposes. The transfer does not trigger reassessment by the county assessor, and title insurance remains in place.

In California, trust transfers are structured as grant deeds—sometimes called “trust transfer grant deeds”—that provide an implied, limited warranty of title.

Warranty of Title in Trust Transfer Deeds

The warranty of title in a deed makes the grantor legally and financially responsible for title defects. A warranty of title can be full—covering the entire chain of title—or limited to the grantor’s period of ownership. A deed can also omit the warranty of title, placing all risk on the grantee.

In a trust transfer deed, the grantor is usually the trustee and beneficiary of the trust that receives the property. The grantor’s continued interest in the property, held indirectly through the trust, minimizes the practical risk of a lawsuit resulting from title defects. But, as discussed below, some attorney include a warranty of title for title insurance purposes.

Trust Transfer Deeds and Title Insurance

Many attorneys include a warranty in trust transfer deeds to ensure continuity of title insurance when transferring property to a trust. Most title insurance policies are based on the American Land Title Association (ALTA) forms. Under ALTA Owner’s Policy (2006), Condition 2(a):

The coverage of this policy shall continue in force… so long as the insured retains an estate or interest in the land, or holds a mortgage thereon, or has liability by reason of warranties in any transfer or conveyance of the title [emphasis added].

When the grantor includes a warranty in a trust transfer deed, it creates “liability by reason of warranties,” ensuring that the coverage remains in place, but only as it relates to the grantor. This does not, however, mean that the trust is insured, only that the grantor remains protected after the transfer.

There are two ways to be sure that the trust itself is a covered insured under a title policy. First, the grantor can use a policy form that defines the insured to include estate-planning transfers (e.g., ALTA Homeowner’s or the 2021 ALTA Owner’s Policy language extending insured status to an “Estate Planning Entity” or similar). In those forms, coverage can continue to the trust without relying on deed warranties.

The other option is to request an additional-insured or successor-insured endorsement at the time of the trust transfer deed. Many underwriters offer these for transfers to living trusts, often using HO 04 41 – Additional Insured endorsement or the HO 05 43 – Residence Held In Trust endorsement.

Trust Transfer Deeds for Mortgaged Property

A trust transfer deed can safely transfer mortgaged property into a living trust without triggering the lender’s due-on-sale clause if it meets the federal conditions set by the Garn–St. Germain Act. These conditions require:

The grantor/borrower must have the right to revoke the trust (no irrevocable trusts)
The grantor/borrower must be a beneficiary of the trust
The grantor must have the right to occupy the property transferred to the trust

If the trust meets these conditions, the lender cannot enforce a due-on-sale clause, even if the mortgage contract includes one. Otherwise, the grantor/borrower must decide whether to proceed with the transfer without the protection of the Garn–St. Germain Act. Because lenders rarely enforce due-on-sale clauses as long as the loan remains in good standing, some borrowers find that saving the hassle and expense of probate is worth the small risk that the lender could call the loan. More conservative borrowers—particularly for high-value commercial property—won’t do it.

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