The 10 Biggest California Real Estate Myths Busted
What California Homeowners Search for Most (and the Estate Planning Solution) Buying
The home is where the heart is. Real estate is often a family’s general wealth transfer strategy.
And yet real estate buyers in California are left on their own when it comes to critical decisions about their real estate:
how to take title, how to avoid probate, how to thoughtfully and carefully purchase property with a third party.
In California, the failure to protect your real estate with estate planning comes with a high price:
Probate is a public court process that ensures a deceased person’s assets are distributed according to their wishes, or according to the laws of the state if the person did not have a valid will or trust.
Why would assets go through Probate:
Because they have not been transferred to a revocable trust or because there is no living adult transfer on death beneficiary for that asset.
It can cost tens of thousands of dollar, even if you have very little equity in the property.
It is a public process. It does not protect beneficiaries from creeps, creditors, or predators.
It does not provide a surviving spouse with tax planning or asset planning ability. Minor children cannot legally inherit, leaving a judge to decide what happens to their assets.
It depends. If you have separate property there is a statutory formula that dictates how much would pass to a surviving spouse and how much must be distributed to other people, such as your children or your parents.
If you own a business with other people, they cannot be forced into business with your spouse.
If your out of state property has not been transferred to
a trust, then a probate will be opened in California and an ancillary probate opened in the state where the property is located.
Vesting refers to how title to property is held.
In California, vesting determines:
Vesting is not just a technical escrow detail – it is an estate planning decision.
Because California is a community property state, the way title is held can create legal presumptions that impact:
Incorrect vesting can unintentionally override your expectations.
Not necessarily.
If you are married, taking title solely as trustee without careful analysis can create a presumption of community property — even if separate property funds were used.
In California, titling property in trust while married may:
Trust ownership and marital property characterization must be coordinated carefully.
Trust funding is essential — but it must be done correctly.
Common ways married couples hold title include:
Each option carries different consequences for probate, tax basis, and divorce.
There is no one-size-fits-all answer.
Yes.
Title creates presumptions. Even if spouses verbally agree something is separate property, vesting can complicate:
Vesting decisions made during escrow can become key issues years later.
Yes.
Certain forms of vesting (such as community property) may provide a full step-up in basis at the first spouse’s death.
Other forms may not.
Proper coordination between vesting and your estate plan can significantly reduce capital gains exposure for the surviving spouse.
No.
Escrow officers cannot provide legal advice about:
Vesting should be reviewed with an estate planning attorney before closing.
Leaving real estate to your children is complicated under Prop 19.
Only $1M Dollars in value of your primary residences is exempt from property tax reassessment. If you leave your home in equal shares to your children, expecting them to “buy each other out”, you will trigger income tax, transfer tax, and reassessment.
All of this is expensive and usually leads to the sale of the family home.
Proposition 19 significantly changed how property taxes are handled when real estate transfers from parent to child.
Many families assume they can pass down the family home without major tax consequences. Under current California law, that is often no longer true.
Under Proposition 19:
If the requirements are not met, the property is reassessed to current market value – which can dramatically increase property taxes.
This is where many families get into trouble.
If you leave your home in equal shares to multiple children, expecting one to “buy out” the others, you may unintentionally trigger:
The result is often the forced sale of the family home.
Yes — but differently.
Rental property generally does not qualify for the parent-child exclusion. Upon transfer at death, it is typically reassessed to current market value.
For families relying on rental income, this can significantly impact cash flow and long-term viability.
Prop 19 cannot be avoided with simple paperwork.
However, thoughtful estate planning can:
Real estate planning must now account for income tax, property tax, and trust design together.
Before Prop 19, families could often transfer real estate with minimal property tax change.
Today, leaving real estate to children without planning can destabilize long-term wealth strategies.
Real estate is too valuable — and too complex — to leave to assumption.
We’ve worked with Patricia and her team for several years now and I’m always impressed by their level of detail and streamlined process. They create a customized experience that helped us think through our estate plan from a financial, emotional, and legal perspective. I would highly recommend working with Patricia!
Abby S.
My wife and I enjoyed working with Nadya at DeFonte Law to create our trust. The firm’s approach was very easy for someone with limited legal and financial experience. They helped us thoroughly account for what we needed to protect out assets and family members while still keeping the process focused and timely.
Eric S.
Working with Wendy on my estate planning with De Fonte Law was a real gift. She is kind, compassionate and patient. It took extra time for me due to multiple injuries and setbacks and I found her to be very understanding and encouraging. It is a big relief to have this major undertaking close to completion. Thank you Wendy!
Susanne K.
What California Homeowners Search for Most (and the Estate Planning Solution) Buying
Real estate is the biggest area of confusion for my clients. Deeds
