When a parent's La Jolla or Del Mar home is held in a living trust, the successor trustee can usually sell it without probate court. California Probate Code Section 16061.7 requires notifying beneficiaries within 60 days after the trust becomes irrevocable, and IRC Section 1014 generally resets its tax basis to date-of-death value.
This article is general information, not tax or legal advice. Please consult a CPA or attorney about your specific situation.
What Must a Trustee Do Before Selling?
Before selling, the successor trustee generally sends the required notice to beneficiaries and heirs, secures the property, and gets a date-of-death valuation. Under Probate Code Section 16061.7, notice is due within 60 days after a revocable trust becomes irrevocable, and it starts a 120-day window for a trust contest.
Probate Code Section 16061.7 requires the trustee to serve notice when a revocable trust becomes irrevocable because of the settlor's death. The notice must include this warning: "You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later." (California Probate Code Section 16061.7(f) and (h), leginfo.legislature.ca.gov, retrieved October 29, 2026).
Selling is an option, not a requirement. Probate Code Section 16226 states: "The trustee has the power to acquire or dispose of property, for cash or on credit, at public or private sale, or by exchange." Whether to sell, keep, or distribute the home depends on the trust terms and the trustee's duties to the beneficiaries (leginfo.legislature.ca.gov, PROB 16226, retrieved October 29, 2026). Your trust document may add or limit powers, so the trustee should review it with the trust attorney.
Many families choose to list after the contest window has run. That is a decision for the trustee and their attorney. In my practice, we time the listing once the trust attorney confirms the trust is in order and the family's financial advisor has reviewed the tax and capital gains implications.
How Does the Step-Up in Basis Affect Capital Gains?
Under IRC Section 1014, property passing from a decedent generally takes a basis equal to its fair market value at the date of death. If the home sells soon after for close to that value, taxable gain is often small. A date-of-death appraisal documents that number.
The statute provides that the basis of property acquired from a decedent is "the fair market value of the property at the date of the decedent's death," with an alternate valuation election available under Section 2032 (26 U.S.C. Section 1014(a), Cornell LII, retrieved October 29, 2026).
One caution: some older AB or bypass trusts may not give a second step-up at the surviving spouse's death for assets held in the bypass share. That is a question for the trust attorney or CPA before listing.
Keep vs. Sell: What Changes for the Family
Question | Sell from the trust | A child keeps it as their residence |
|---|---|---|
Income tax basis | Generally stepped up to date-of-death value (IRC 1014) | Same stepped-up basis carries forward |
Property tax | Buyer is reassessed | Partial base transfer, capped (Prop 19) |
Occupancy requirement | None | Child's primary residence, exemption filed within 1 year |
Carrying costs | End at closing | Ongoing taxes, insurance, maintenance |
What If a Child Wants to Keep the Home Instead?
Under Proposition 19, a child who inherits a parent's family home can keep part of the parent's property tax base only if the child moves in as their primary residence. For transfers from February 16, 2025 through February 15, 2027, the excluded amount is capped at the factored base year value plus $1,044,586.
According to the State Board of Equalization, the child must make the home their primary residence and file for the homeowners' or disabled veterans' exemption within one year. Any value above the cap is added to the taxable value (BOE Proposition 19 Fact Sheet, Publication 801, and California Revenue and Taxation Code Section 63.2, retrieved October 29, 2026).
In La Jolla and Del Mar, where market values often far exceed that cap, many families find a reassessment hard to avoid if they keep the home. That is why the keep-versus-sell decision deserves real numbers.
Trustee Sale Checklist
- Locate the trust, all amendments, and the death certificate
- Serve the Probate Code 16061.7 notice with the trust attorney
- Order a date-of-death appraisal
- Secure, insure, and maintain the vacant home
- Gather permits, disclosures, and records the trustee can reasonably locate
- Agree with beneficiaries on prep budget, pricing, and timeline
- Coordinate the escrow and title requirements for a trustee sale
Frequently Asked Questions
Here are direct answers to the questions sellers ask us most about this topic. Each answer is based on the sources listed below, retrieved October 29, 2026. Where a detail depends on your situation, the answer says so, and we are glad to walk through yours in a short conversation.
Does a trust sale go through probate court?
Usually not. A successor trustee can typically sell trust property under the powers in the trust and the Probate Code without court supervision. Your trust attorney will confirm this for your trust.
Do we have to wait 120 days to sell?
Not by statute in every case, but the notice under Probate Code 16061.7 starts a contest period that many trustees prefer to let run first. Ask your attorney.
Who signs the listing agreement?
The successor trustee, acting for the trust. Beneficiaries do not usually sign, though good trustees keep them informed.
Will we owe capital gains tax?
Possibly, but often less than expected because of the step-up in basis under IRC 1014. Gain is generally measured from the date-of-death value.
Do we have to fix everything before selling?
No. Trust sales are often sold with limited repairs. The trustee still has disclosure duties, so ask your attorney what applies.
Sources
- California Probate Code Section 16061.7, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB§ionNum=16061.7 (read directly, retrieved October 29, 2026)
- California Probate Code Section 16226, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB§ionNum=16226 (read directly, retrieved October 29, 2026)
- 26 U.S.C. Section 1014, Cornell LII, https://www.law.cornell.edu/uscode/text/26/1014 (retrieved October 29, 2026)
- BOE Proposition 19 Fact Sheet (Publication 801), https://www.boe.ca.gov/pdf/pub801.pdf, and RTC Section 63.2 (retrieved October 29, 2026)
This article is general information, not tax or legal advice. Please consult a CPA or attorney about your specific situation.