Legal Question in Real Estate Law in California

401 exchange and putting new property in the Trust

My mother sold her home under a 401 exchange and purchased a Condo in our town. The origional home was part of her Living Trust. The Grant Deed shows her name as Trustee under the name of her Living Trust.

I want to know if this protects the new property as being a part of the Trust or if we need to take any action to add the property into the Trust and amend the origional Trust to remove the sold property and replace it with the new?

Thank you for your assistance in helping us understand what we may or may not need to do.

Asked on 8/25/06, 2:39 pm

4 Answers from Attorneys

Samuel Lovely Law Office of Samuel Lovely

Re: 401 exchange and putting new property in the Trust

Title to the "new" property would need to be held by the trust, as opposed to your mother's name. Additionally, amendment of the trust would be prudent.

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Answered on 8/27/06, 6:48 pm
Ken Koenen Koenen & Tokunaga, P.C.

Re: 401 exchange and putting new property in the Trust

She needs to execute a new deed, deeding the property to the trust. No amendment is required.

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Answered on 8/25/06, 2:53 pm
H.M. Torrey The Law Offices of H.M. Torrey

Re: 401 exchange and putting new property in the Trust

A change in an asset's form is not always a change in the asset's substance. However, in a nutshell, its always BEST to be "overly safe" than careless per se. Under the circumstances, you should consult with an attorney regarding the precise exchange details, and most likely have a new trust instrument drafted for added "insurance" or protections rather than necessarily presume the new property would become the subject matter of the original trust now. For affordable, prompt legal assistance in this matter, contact us directly today for a free phone consultation.

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Answered on 8/25/06, 2:55 pm
Roy Hoffman Law Offices of Roy A. Hoffman

Re: 401 exchange and putting new property in the Trust

You do not need to amend the trust, regardless of the details of the "401 exchange" (I assume that you mean a 1041 exchange). The trust probably does not specifically describe the old property. You do, however, need to transfer title to the new property into the trust by having a new deed prepared, signed by your mother, and recorded in the county recorder's office in the county in which the property is located. Although you can do this yourself, you would probably be better off having an attorney prepare the deed to ensure that the proper language is used.

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Answered on 8/25/06, 6:20 pm

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