Many people create a living trust and later decide they would like to change its name. Perhaps they got married, divorced, purchased additional property or simply wanted a name that better reflects their family’s legacy.
The good news is that changing the name of your trust is usually possible. However, there are important considerations, especially if your trust owns real estate.
A trust’s name is more than just a label. It is the legal identity under which assets are held. For example, a trust may be called the “John and Mary Smith Family Trust dated January 1, 2020.” Years later, John and Mary may decide they prefer the name “Smith Legacy Trust.” While this may seem like a simple change, there are legal and practical steps that should be taken to keep everything consistent.
In most cases, changing a trust’s name requires a formal trust amendment or trust restatement. The exact method depends on the trust’s terms and whether other changes are being made at the same time. If you are also updating beneficiaries, trustees or distribution provisions, a complete restatement may be more efficient than preparing multiple amendments.
Once the trust name changes, all assets titled in the trust should be reviewed. This includes bank accounts, brokerage accounts, business interests and, most importantly, real estate.
One of the most common questions homeowners ask is whether they must update the deed to their property. While the answer depends on the circumstances, it is generally considered the best practice to do so.
Suppose Mary transferred her home into the “Mary Jones Living Trust.” Several years later, she changes the trust’s name to the “Jones Family Legacy Trust.” The county records will still show the property as owned by the old trust name. Although the trust itself remains valid, the discrepancy can create confusion later.
The deed serves as the public record of ownership. If the trust name on the deed does not match the trust’s current legal name, questions may arise when the property is sold, refinanced or administered after the trustmaker’s death. Title companies, lenders and successor trustees may require additional documentation proving that the trust named on the deed and the trust named in the current documents are actually the same trust.
Imagine Mary passes away 20 years later. Her children are trying to sell the home, but the deed references a trust name that no longer exists. While the issue can usually be resolved, it may require additional paperwork, delay the transaction and increase legal costs.
The good news is that updating a deed solely to reflect a trust name change generally does not trigger a property tax reassessment in California because ownership has not actually changed. The beneficial owner remains the same; only the trust’s name has been updated. However, the deed should be prepared correctly to avoid unintended consequences.
The bottom line is that changing a trust’s name is usually straightforward, but it should not be treated as merely a cosmetic change. Updating the trust documents and ensuring that real estate and other assets reflect the new trust name can save your family significant time, expense and frustration in the future. A little maintenance today can help ensure a smooth administration tomorrow.
Send your questions to ccolan@colanlegal.com and use “Alpine Mountaineer estate planning question” as the subject. We’ll answer your questions in our upcoming issues. This article is provided by your local estate planning attorney, Corina Colan. The Law Office of Corina I. Colan / (909) 265-3315 / www.colanlegal.com
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