Increased Recorder Fees in California

Beginning January 01, 2018, a new $75 fee will be attached to certain real estate documents (and others) that are recorded at the county recorder’s office. This new fee is due to Senate Bill 2, which was signed into law this week. The funds are to be used to address California’s affordable housing crisis.

HOW DOES THIS AFFECT ME?

When you plan for your estate, frequently the best planning includes a trust. When you form a trust, one step you must take is to record a new deed for your real property stating that your property is now in the the trust. This deed gets recorded at the county recorder’s office.

There are certain exceptions to this fee: however, for estate planning purposes, this fee will impact how much it costs for record deeds to and from a trust. In Kern County, most deeds cost between $16-19 to record. As of January 01, 2018, this will go up to $91-94 for the same deed, if you do not fall under certain exceptions.

The short of it is this: if you are putting the home you own AND occupy into a trust, you are exempt from this fee. (Whew!) However, if you have other properties, you are not. There is a certain amount of uncertainty amongst lawyers and county officials in multiple counties: I’ve had contact with others in this area and every county seems to be doing it a little differently. I’ll update this as soon as it becomes more definitive. But so far, the practice here in Kern County is that if someone owns a parcel of land apart from their residence, that land has the $75 fee attached.

THE LAW

The text of the law as found in the Government Code is below, or you can click HERE to read the entire bill.

27388.1.

 (a) (1) Commencing January 1, 2018, and except as provided in paragraph (2), in addition to any other recording fees specified in this code, a fee of seventy-five dollars ($75) shall be paid at the time of recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, except those expressly exempted from payment of recording fees, per each single transaction per parcel of real property. The fee imposed by this section shall not exceed two hundred twenty-five dollars ($225). “Real estate instrument, paper, or notice” means a document relating to real property, including, but not limited to, the following: deed, grant deed, trustee’s deed, deed of trust, reconveyance, quit claim deed, fictitious deed of trust, assignment of deed of trust, request for notice of default, abstract of judgment, subordination agreement, declaration of homestead, abandonment of homestead, notice of default, release or discharge, easement, notice of trustee sale, notice of completion, UCC financing statement, mechanic’s lien, maps, and covenants, conditions, and restrictions.

(2) The fee described in paragraph (1) shall not be imposed on any real estate instrument, paper, or notice recorded in connection with a transfer subject to the imposition of a documentary transfer tax as defined in Section 11911 of the Revenue and Taxation Code or on any real estate instrument, paper, or notice recorded in connection with a transfer of real property that is a residential dwelling to an owner-occupier.
(b) The county recorder shall remit quarterly, on or before the last day of the month next succeeding each calendar quarterly period, the fees, after deduction of any actual and necessary administrative costs incurred by the county recorder in carrying out this section, to the Controller for deposit in the Building Homes and Jobs Trust Fund established by Section 50470 of the Health and Safety Code, to be expended for the purposes set forth in that section. In addition, the county shall pay to the Controller interest, at the legal rate, on any funds not paid to the Controller before the last day of the month next succeeding each quarterly period.
(c) If the Department of Housing and Community Development determines that any moneys derived from fees collected are being allocated by the state for a purpose not authorized by Section 50470 of the Health and Safety Code, the county recorder shall, upon notice of the determination, immediately cease collection of the fees, and shall resume collection of those fees only upon notice that the moneys derived from the fees collected are being allocated by the state only for a purpose authorized by Section 50470 of the Health and Safety Code.

A Tale of Sadness: When You Thought You Were Prepared

*All names have been changed.

Sam and Tanya were together for over 30 years. They were good for each other: soulmates. Both of them were getting a bit older in years, and both were having health problems. They married in the summer, and three months later, Sam was diagnosed with cancer and passed away. He had written a holographic will, but it had burned in a fire. There was no evidence of any of his wishes for his property. He told his new wife that he wanted her to have everything, and to give a few specific monetary gifts to his sister and nephew. He wanted her to be taken care of.

Because Sam didn’t have a will,  Tanya is left with probating his estate. Any property they would have owned as community property would go to Tanya directly, but because they weren’t married for all those years, neither one them had community property together. Intestate laws dictate that she will receive 1/2 of his separate property. His mother will receive the other half. Sam’s intentions to take care of Tanya and provide for her will not be fully realized, and because creditors will be paid first, Tanya and Sam’s mom will receive their inheritance AFTER the bills have been paid. Medi-cal will come knocking on the door and demand payment.

Sam would be heartbroken if he could see the result of not taking care of his assets. His intentions were good, but failure to take care of business now leaves his beloved wife in a mess.

Probate court is not where you want your assets made public, and it is not where you want your loved ones to have to be after they lose you. Plan ahead and get your affairs in order now, so your family doesn’t have to pay the price later.

“You don’t need to fund your trust.” Said no good lawyer, ever.

A Trust Needs to Be Funded To Be Valid

I was reading my parent’s trust documents recently.  I called my dad up and asked him a few questions about the process he went through. That’s another post for another time. I would like to tell you that he paid big bucks for a trust to be formed. At the time, his houses were put in the trust. Since then, he has sold both and moved, AND acquired a rental house.

None of the new properties are in the trust. He asked his lawyer about it and was told not to worry about it. The pourover will catches all that property and puts it into the trust.

And it does.

AFTER IT GOES THROUGH PROBATE.

One of the biggest reasons to form a trust in the first place is to avoid probate! We are both wondering why the lawyer would say this.

Perhaps they are thinking of a Heggstad** petition, based on the case by the same name (probate Code 850). If your trust includes a list of assets you want in the trust, along with a statement of conveyance, your heirs can petition the court to have those assets included in the trust.  Or, maybe they are thinking of the 2015 update to this idea of “I forgot to fund my trust” with the Ukkestad case *** where the court ruled that specific language in the trust could be a substitute for actual titling the property in the name of the trust. A simple provision stating something to the effect of “all my real property” in just the right place of the trust will suffice.

Both of these remedies to an unfunded trust avoids a full probate. But it still goes through the courts, which is what we are trying to avoid. Your heirs will be dealing with the grief of your absence: they shouldn’t have to deal with grief from the courts.

You MUST title your property in the name of your trust if you want to avoid probate and the courts. It’s as simple as filing a grant deed with the recorder’s office. Is it a pain to drive downtown after you sign the paper in front of a notary?

Yes. (For the record, if I prepare your trust for you, I take the deeds downtown for you.)

But, it is far worse for your heirs to drive downtown to file for probate, which is expensive and takes months (sometimes years) on end. Probate can cost thousands, even tens of thousands of dollars. Yikes. Even if they are granted a shortened probate process with a Heggstad petition, that is still time and money spent with the courts.

Do yourself and your heirs a favor: look through your trust documents and make sure your assets are in the trust. If someone says, “Don’t worry about putting those in the trust. The will catches it all.” Run. Run away and go straight to the recorder’s office with a notarized grant deed in hand.

Fund that trust.

** Estate of Heggstad, 16 Ca4th 943, 20 CR2d 433 (1993)

***Ukkestad v RBS Asset Finance,  235 Cal.App.4th 156 (2015)

 

 

A Revocable Living Trust: What is it?

A revocable living trust is both simple and confusing at the same time.

It can take a while to wrap your head around it. It probably doesn’t help when you see a trust full of really big words and complex paragraphs. Trusts are boring to read, and trusts seem like something only rich people do.

You know, like in the movies? Or perhaps you’ve met someone who was a trust fund kid?

If your estate is like mine (and most the people I know), and you want to avoid the probate process, I can help you.  If you own a home and have a few assets like a life insurance policy, a retirement fund, and maybe a couple of cars or toys, then a revocable living trust can be one tool in your estate plan that will save your family time and money by avoiding the probate process.

A Trust Is…

A revocable living trust is a tool. A proper estate plan is like Batman’s utility belt. Lots of different gadgets and tools are on that belt, and each one has a different function to help Batman in a time of need.

A revocable living trust is one of those tools in your estate planning “utility belt.” (There are other tools as well.) It’s made of paper and words, but it is a tool that is legally recognized as a way to help a person or a family preserve their property. We all work hard. We deserve the right to be able to take care of our property and keep the courts and prying eyes out of our business.

A trust can do that.

A trust is a private document. It allows you to stay out of the courts and keep your hard earned property yours. A revocable living trust is one type of tool that allows this, and it might be right for you if:

  • You would like to avoid probate, AND
  • You would like to keep your assets out of the reach of possible MediCal recovery, AND
  • You want to maintain control over all your property and assets while you are alive, AND
  • You can name successors who are responsible and willing to follow the trust documents when you are no longer able to do so yourself.

I like to tell my clients that a trust is like a treasure chest. The trust documents build the chest, and your “stuff” is the treasure inside it. While you are living, you have complete control over the chest, and the treasure inside it. You can change the contents, and you can even change the structure of the chest. Once you pass away, however, the chest is no longer changeable, and your successor trustee must now follow your instructions on what to do with the chest, and how to manage your treasures inside.

How It Works

If you think you need a revocable living trust, you and I will work together to determine if a trust will serve your needs, and if yes, what you would like your trust to say. A trust can be formed whether you are single or married, and if you are married, you may choose to come in singly or together with your spouse.

We will discuss your financial situation in as much detail that allows me to advise you properly. At this point, you will have attorney-client privilege, so this information stays confidential. We will also talk about what you envision for the future at certain time periods: 10 years from now, 20 years, etc. This helps us both know what is important to you so your estate plan can reflect your values.

After we dive in and talk about your assets, liabilities, your values, and your family, I will be ready to draft your documents, and your RLT will be one of those documents.** You will be one giant step closer to having a plan in place, and the peace of mind that comes from that is priceless for both you and your family.

**There are other documents you need for a fully formed estate plan. When you form your revocable living trust with me, those other documents are included in your plan. These include wills, powers of attorney, advanced healthcare directives, HIPAA forms, and other documents to get you organized and ready for the future.

Why do I Need an Estate Plan?

Most people I know don’t think they need an estate plan.

“The kids can take care of it after I’m gone.”

“It’s too expensive.”

“I want one, but I don’t know where to start.”

“I don’t have the time. I keep forgetting.”

I’m with you on this. Once upon a time, after the birth of our fourth child and an anticipated weekend away without kids for our anniversary, I was spurred into action. (Probably by postpartum hormones.) Regardless of the catalyst, I was panicked and felt like we needed a plan in case we died in a car accident and grandma had the kids. I didn’t have the time or the money to hire anyone.

I printed out the free statutory will form from the California Bar Association website, one for myself and one for my husband. It allowed us to name a guardian for our children and an executor to take care of the finances. That was 7 years ago, and I still have those forms.

It’s time for an upgrade. Since finishing law school and watching the last of my grandparents pass away, I now know exactly why I need an estate plan. I currently don’t have much of an “estate” to speak of. It consists of a house, a couple of cars, and a bank account that always seems to run low.

But in the last few years, I’ve watched how my own family handled with ease the property of my grandparents after their passing. It was such a benefit to the generation above me: they were able to avoid probate (and those enormous probate fees) and obtain a leg up in financial terms.

Every family has wealth. By proper financial and estate planning, that wealth can be preserved and handed down to future generations. And, if you are like me and sometimes imagine the worst case scenario of an early death and leaving behind children, then an estate plan can ease your mind and make sure your children are taken care of.

It’s easy to put off for another day. Totally easy to say, “I’ll get to that later.”

I am getting my estate in order. No more putting it off.

It’s time.

Is it time for you, too?