Can a trust hold joint tenancy property in California?

Share This Article

In California, you cannot put property held in joint tenancy into a trust. If you do, the joint tenancy is automatically dissolved. This has been a point of confusion due to the evolving interpretation of the state’s legal code.

Note, there are two questions that are easily confused:

  1. Can you put joint tenancy property into a trust? – This post is about answering this question. In brief, no.
  2. Can a trust be a joint tenant? –  Yes, but we are not addressing this here. Follow this link for a reliable answer.

The Previous Interpretation of CA Civil Code CIV § 683 (November 13, 2003 – September 30, 2013)

Technical Language: CA Civil Code CIV § 683 previously led the Board of Equalization, in their 2005 memorandum, to believe that a trust could hold joint tenancy property “Transfer of Joint Tenancy Interest into a Revocable Trust Would Not Sever the Joint Tenancy”. Civil Code section 683, subdivision (a)  states: “A joint interest is one owned by two or more persons in equal shares … when expressly declared in the transfer to be a joint tenancy, or when granted or devised to executors or trustees as joint tenants.”

Lay Explanation: There was a time when California’s laws seemed to suggest that trusts could “contain” joint tenancy property.

The Change in Administrative Ruling in 2013

Technical Language: On October 1, 2013, after a public hearing and approval process, the State Board of Equalization altered Property Tax Rule 462.040, specifically addressing joint tenancies. This amendment stated that trusts could only maintain pre-existing joint tenancy statuses if the transfer happened between November 13, 2003, and September 30, 2013.

Lay Explanation: In 2013, the rules changed. Trusts could only contain joint tenancy property if was transferred to them within a specific 10-year window.

Current Implications for Joint Tenants and Trusts

Technical Language: Today, transferring a joint tenant’s interest to a trust will automatically terminate the joint tenancy, signaling a change in ownership. Following this, Proposition 13 mandates the county assessor to update the property’s value based on current market rates at the time of ownership transition. See California State Board of Equalization FAQ. An exception exists when the transfer occurs between spouses. See the FAQ.

Lay Explanation: Now, if someone in joint ownership moves their share to a trust, the joint tenancy ends. The property may then have its value reassessed based on today’s market prices.

See also

Community Property (CP), CP With Right Of Survivorship, And Joint Tenancy Compared

We don’t spam! No more than five mailings per year.

More Articles

Schedule a free consultation with Klaus Gottlieb

© 2024 wealthcarelawyer.com. All rights reserved.

Wealth care is an orchestrated approach to your estate planning needs that considers multiple dimensions and coordination with your existing financial and tax professionals.