How to Hold Title to California Real Estate: Vesting Options, Taxes, and Why Trusts Usually Win

Picture this: you buy a home, the deed gets recorded, and life moves on. Years later someone asks, “How are you vested on title?” Cue the blank stare. Vesting simply means how the law recognizes ownership of your California real property—who can sign, who inherits, what taxes apply, and how creditors or courts might treat the property. Choose wisely up front (or fix it with a new deed), and you can save your family time, money, and stress.

Below is a plain-English tour of the most common vesting choices, with practical pros/cons, tax notes, and a clear explanation of why “just add my kid to the deed” is rarely a good estate planning strategy.

The common vesting options in California

Sole ownership (individual)

What it is: One person holds 100% of the title.
Pros: Simple. Full control.
Cons: If you pass away without planning, your real estate likely goes through probate—public, slow, and expensive. Creditors of the sole owner can reach the property.
Changeability: You can later deed the property into a trust or change vesting by recording a new deed (and a PCOR form at the county).
Tax notes: Your heirs may receive a “step-up” in income tax basis at death. If you’re married, consider whether it should be titled as community property for better tax results.

Community Property (married spouses / registered domestic partners)

What it is: Each spouse/partner owns an undivided one-half interest in the community estate.
Pros: Valuable tax feature—community property generally receives a full step-up in basis on both halves when the first spouse dies (that can reduce capital gains if the survivor later sells).
Cons: Without a survivorship feature or a trust, the decedent’s half must typically go through probate to transfer to heirs.
Changeability: To sell, encumber, or deed community real property, both spouses must sign. That’s not optional.

Community Property with Right of Survivorship (CPWROS)

What it is: Community property that also carries a built-in “survivorship” transfer to the surviving spouse—no probate at the first death.
Pros: Combines probate avoidance with the community property double step-up in basis at the first death—powerful for tax planning.
Cons: It only benefits the surviving spouse; it doesn’t direct what happens after the second death. That’s where a trust shines.
Changeability: You can switch to or from CPWROS by recording a new deed with the correct statutory language.

Joint Tenancy (with Right of Survivorship)

What it is: Two or more people own equal shares; when one dies, their share passes automatically to the survivors.
Pros: Avoids probate at each death among the joint tenants.
Cons: Not the same tax treatment as community property. With spouses, CPWROS usually provides better basis results; with non-spouses, only the decedent’s half typically steps up, which can mean higher capital gains for survivors later. It also exposes the property to each co-owner’s creditors, divorces, or lawsuits.
Changeability: Any joint tenant can sever the joint tenancy (ending survivorship) by recording the appropriate document. That surprise can defeat your plan.

Tenancy in Common (TIC)

What it is: Two or more people own specific percentages, which don’t pass by survivorship.
Pros: Flexible percentages (not just 50/50). Each owner can leave their share to beneficiaries (via will or trust).
Cons: Each owner’s share does go through probate unless it’s in a trust. Co-owners can force a sale via partition litigation. Creditor exposure is similar to joint tenancy.
Changeability: Each co-owner can sell, gift, or encumber their own fractional interest without the others’ consent, but changing percentages or doing whole-property financing requires all owners to sign and record a new deed. You can deed your share into a revocable trust to avoid probate on that portion—just watch for reassessment/transfer-tax issues.

Title in a Revocable Living Trust

What it is: The trustee (often you) holds title for your benefit while you’re alive. On death or incapacity, your chosen successor trustee takes over privately—no court file.
Pros:

• Avoids probate and maintains privacy.

• Flexible control over who gets what and when (great for blended families or spendthrift protection).

• No property tax reassessment just for moving your home into your revocable trust when you (or your spouse) are the present beneficiary. That’s expressly excluded from change in ownership for Prop 13 purposes. 

• Usually no due-on-sale problem when you deed your owner-occupied home into your revocable trust—the federal Garn-St. Germain Act forbids lenders from calling the loan due in this specific situation. 

Cons: Requires proper setup and funding (actually recording the deed to the trust). Not an asset-protection device by itself (it’s revocable).
Changeability: Very easy. Amend the trust or record a new deed if you change trustees or terms.

Title in a Limited Liability Company (LLC) or Corporation

What it is: The entity holds title; you own membership or stock interests.
Pros: Useful for rentals or multiple properties—centralized management and potential liability protection for non-owner-occupied property.
Cons: Property tax traps: changes in entity ownership can trigger reassessment if someone obtains more than 50% control or when original co-owners cumulatively transfer more than 50%—complex rules under RTC §64. Financing can be harder (lenders prefer personal borrowers for homes).
Changeability: You can move property into/out of an entity, but make sure you don’t trigger reassessment or transfer taxes; get counsel before you record anything.

California Revocable Transfer on Death (TOD) Deed

What it is: A deed that names a beneficiary to take the property at your death, bypassing probate. It stays revocable while you’re alive. Governed by Probate Code §§5600, et. al. (updated statute framework).
Pros: Simple document; avoids probate; you keep full control while living.
Cons: It doesn’t handle incapacity, minor beneficiaries, or complex family dynamics. It can create title problems if beneficiaries die out of order or disagree, and creditor claims can still attach. A trust is usually more complete.
Changeability: You retain full control while living—sell, refinance, or deed the property into your revocable trust at any time. You can change beneficiaries or revoke the TOD deed by recording a new TOD deed or a revocation before death. After death, it’s locked in; the will can’t override it and beneficiaries take as recorded.

When (and how) you can change vesting

• Record a new deed with the county recorder, and include the required Preliminary Change of Ownership Report (PCOR).

• If the property is community property, both spouses must sign any deed that sells, encumbers, or otherwise transfers community real property.

• Moving your home into a revocable trust generally won’t trigger (1) a Prop 13 reassessment (RTC §62(d) exclusion) or (2) a due-on-sale call if you stay a beneficiary/occupant (Garn-St. Germain). Rentals are treated differently under the federal regulation, so review before moving investment property.

• Entity changes (LLC/corporation) can trigger a reassessment when control shifts—watch RTC §64 rules.

Why “just add my child (or friend) to the deed” is often a mistake

We hear this weekly. It sounds easy. It can be costly.

1. Gift and control problems. Adding a non-spouse to title is often a taxable gift of part of your equity and gives that new co-owner real legal rights—like the power to block a sale or force one via partition.

2. Creditor and divorce exposure. Your co-owner’s creditors (or ex-spouse) can target your home because you invited them onto the title.

3. Income tax basis. A surviving joint tenant may not get the same basis adjustment as community property would provide to spouses. That can mean larger capital gains if the property is later sold. 

4. Property tax reassessment. Transfers between non-spouses can trigger Prop 13 reassessment, raising annual property taxes. Some transfers are excluded (e.g., to a revocable trust when you remain the beneficiary; interspousal transfers), but many are not. 

5. No plan for incapacity. Joint tenancy doesn’t appoint anyone to manage the property if you’re incapacitated. A revocable trust does—seamlessly, privately, and without court intervention.

In short: Joint ownership is a tool, not an estate plan. A trust can deliver probate avoidance, smoother management if you’re ill, smarter tax positioning for spouses, and clear instructions for what happens after the second death.

Which vesting is “best”?

There isn’t a universal best. Here are practical patterns we see:

• Married couples with a home: CPWROS or (often better) a revocable living trust holding title. CPWROS gives probate avoidance at the first death and strong basis treatment; a trust adds control for both deaths and incapacity planning.

• Rental or multi-unit property: Consider LLC title (with the trust owning the LLC) for liability and succession, but plan carefully around RTC §64 reassessment rules. 

• Single owners: A revocable living trust provides continuity, privacy, and avoids probate—without giving away control or inviting a co-owner’s risks. 

Quick compliance notes (because real life matters)

• Words on the deed matter. If you want CPWROS, the deed must say it using the statute’s language; otherwise you may have created plain community property (no survivorship).

• Spousal signature. Don’t try to transfer or encumber community real property without your spouse’s signature—recorders and title companies will balk, and the statute is clear. 

• Don’t trip your loan. Owner-occupied transfers into a revocable trust fall in a federal safe harbor from due-on-sale enforcement. Confirm facts before moving rentals.

The bottom line

Vesting is more than a checkbox at closing. It’s a decision that affects probate, control during incapacity, income and property tax, creditor exposure, and family harmony. For most Californians, a revocable living trust—often paired with community property with right of survivorship language for spouses or simply titling the home to the trust—delivers the smoothest, most protective result.

If you’d like a quick title checkup (or a deed retitled properly), our Filippi Law Firm, P.C. team can help you choose the right approach for your goals and then handle the paperwork—from deed prep to recorder’s office. You’ll walk away with clarity, not guesswork.