After the trust is drafted naming the house as part of the trust property, this couple would fund the trust by placing this real property in the name of the trust. For example, the deed might show the following transfer: "John Doe and Jane Doe, husband and wife, as joint tenants, hereby grant all of their right, title and interest in the following property to John Doe and Jane Doe, as trustees of The Doe 2008 Living Trust." By doing this, John Doe and Jane Doe may control the property as permitted by the conditions set forth in their trust agreement. Oftentimes, the trust agreement will permit the trustees of a living trust to control the property in the same manner as if they owned the property outright, at least when both spouses are living.
However, the bad news: If a trust is not funded properly, it is possible that a probate will need to be opened, just to either fund the trust, or to transfer the property. Either way, this couple would need to employ an attorney and engage in unnecessary costs, when a simple transfer deed would have done the trick.
California has an exception, which would require the filing of a petition with the probate court in an effort to receive a judicial determination that the property should have been transferred into the trust (this is called a Heggstad petition). However, this is a relatively new procedure, and in light of the attorney fees which would be involved, it is also another example of an unnecessary cost. Also, Heggstad petitions do not always work, so the petitioner might not only have the added expense of filing the petition, but also may not prevail in court.
The moral, of course, is to properly fund a trust in the beginning. Doing this will save much effort, time and money in the long run.