Under the California Corporations Code Section 13407, only a qualified professional may be a shareholder in a professional corporation such as a law, medical or accounting practice. Generally speaking, shares in a professional corporation may be transferred to a revocable trust under the following conditions (See Cal Dep't of Consumer Affairs Legal Opinion 79-5):

1. The Trustee and current beneficiaries of the trust are licensed professionals in the relevant field.
2. A non-licensed spouse of a licensed spouse-Trustee does not have an interest in the trust greater than his or her community property interest in the shares of the professional corporation;
3. The trust must provide that: (a) the licensed spouse-trustee has exclusive control and powers relating to the shares of the professional corporation, and (b) on the nonlicensed spouse's death, the spouses' children (or other beneficiaries) have a beneficial interest, if at all, only in the proceeds that may be received from the shares and not equitable title to those shares.

The ability to transfer one's interest in an LLC or partnership is generally governed by an operating or partnership agreement. Usually these agreement contain restrictions on the transfer or sale of an interest in the LLC or partnership; however, many agreements provide an exception where the transfer is to a family member or to a revocable living trust.

If the agreement provides for specific instructions on how to do this, the estate planning lawyer should follow them. Generally, the transfer requires no more than a simple Assignment document wherein the owner of the LLC or partnership states his or her intention to transfer the interest to his or her own revocable living trust.

A General Assignment form is usually an all-encompassing document intended to transfer the entirety of one's assets to his or her trust. Most, if not all, estate planning lawyers will include some form of this document in the estate planning documents prepared for a client.

The document may be also used as the basis of a so-called "Heggstad" petition--a method of transferring real property to a trust without the need for a full probate administration. In preparing a General Assignment form, it is important to exclude assets that are not supposed to be covered by it, for example, property with survivorship benefits or those passing by virtue of a beneficiary designation.

In Estate of Heggstad (16 CA4th 943), the court held that a written declaration of trust by the owner of real property indicating an intent to include the property in the trust was sufficient to fund the property into the trust. This can be extremely helpful to your beneficiaries after you pass away if for some reason your real property got taken out of your trust prior to your death.

Despite the fact that a full probate administration may be avoided by use of a so-called "Heggstad" petition, title companies require a court order confirming that title is properly held by the decedent's trust. Therefore, it is still important that the proper steps be taken to transfer one's real property to his or her trust to ensure an efficient and effective trust administration process.

Since the Heggstad opinion by the court, California courts have continued to honor a Trustor's intention to transfer real property to his or her revocable living trust.