The apartment building is in a trust — how does selling it work after a death?
When the building is held in a living trust, the successor trustee can sell it without probate and without court approval — title companies typically need the death certificate, a certification of trust, and an affidavit of death of trustee. The step-up in basis matters more than the mechanics: the property's tax basis resets to fair market value at the date of death, which often wipes out decades of capital gain and accumulated depreciation. Sell reasonably soon after death and the income-tax bill on the sale is frequently close to zero.
Why the step-up changes everything.
A building bought for $500,000 in 1992 and fully depreciated might carry a $1M+ deferred tax bill if the owner sold it alive — federal capital gains, 25% depreciation recapture, and California's ordinary rates stacked on top. At death, that entire liability evaporates: the basis steps up to date-of-death value (a full step-up on both halves for community property between spouses), and the recapture clock resets to zero. Gain from a post-death sale is measured only from the stepped-up basis, so a sale within months of death usually produces a modest gain or none. This is why "the trust owns it" changes the conversation — the seller's alternatives, timeline, and tax math are all different from a living owner's.
What the trustee still has to get right.
The trustee has legal authority to sell, but also a fiduciary duty to the beneficiaries — which in practice means a defensible price, a documented process, and usually a date-of-death appraisal (needed for the basis anyway). Prop 19 still applies: a parent-to-child transfer through a trust is a change in ownership, so the property-tax reassessment happens regardless, and the higher carrying cost strengthens the case for selling while the stepped-up basis is fresh. Where trusts go sideways is disagreement — one beneficiary wants to keep the building, two want cash. A valuation with real comps and both the as-is and upside numbers is usually what gets a divided family to a decision.
Do all the beneficiaries have to approve the sale?
Usually not — the trust document gives the successor trustee the power to sell. Good trustees still get beneficiaries aligned in writing, because a lawsuit costs more than a conversation.
Does the trust avoid the Prop 19 property-tax reassessment?
No. A trust avoids probate, not reassessment — an inherited rental is reassessed to market value whether it passes through a trust or a will.
What if we hold the building for a few years before selling?
The step-up is not lost, but gain accrues from the date-of-death value forward, and new depreciation taken after death is subject to recapture. The cleanest tax result is a sale while the stepped-up basis still roughly equals the price.
SHAYA LOWENSTEIN · LYON STAHL INVESTMENT REAL ESTATE · DRE #01942326 · (323) 944-2221