Why a California living trust is different
A revocable living trust is a basic estate-planning tool nationwide, but it carries more weight in California than in most states. The reason is California’s probate system. Under California Probate Code § 10810, both the executor and the estate’s attorney are entitled to statutory compensation calculated as a percentage of the gross estate value, not the net. On a $1 million gross estate, the formula produces roughly $23,000 for the executor and another $23,000 for the attorney, regardless of how simple the administration actually is. The fees are paid from estate assets before any distribution to heirs.
The process is also slow. A typical uncontested California probate runs 9 to 18 months from petition to final distribution. Contested cases or cases with creditor disputes can take years. Throughout that time, beneficiaries usually cannot access funds, and the estate’s real estate cannot be sold without court approval.
A funded revocable living trust avoids the statutory fee structure entirely (trustees are paid for reasonable services, not a percentage), keeps the administration out of court, and usually settles in weeks or months. For California families with even a modest home, the math almost always favors a trust.
The basic structure
A revocable living trust is created by the parent (the trustor or settlor) during life. The parent usually serves as the initial trustee, manages the trust assets, and benefits from them. The trust document names a successor trustee who takes over on incapacity or death, and beneficiaries who receive the assets at death.
Because the trust is revocable, the parent can amend or revoke it at any time during capacity. Revocable means the assets remain countable for the parent’s tax purposes (no income-tax shifting), remain reachable by the parent’s creditors (no asset protection from civil judgments), and remain controlled by the parent. The trust’s purpose is probate avoidance and incapacity management, not tax planning or asset protection.
What goes in the trust
- The home. A new deed is recorded with the county recorder transferring title from the parent’s individual name to the trustee’s name acting under the trust.
- Second properties and rentals. Same deed-recording process for each.
- Non-retirement brokerage accounts. The brokerage opens a trust account and assets are transferred in.
- Bank accounts. Either retitled to the trust or kept individually with POD designations naming the trust as beneficiary.
- Valuable personal property. Art, jewelry, collectibles. A schedule of personal property attached to the trust handles most of these.
- Private business interests. Membership interests in LLCs and shares in closely held corporations, where the operating agreement permits.
What does NOT go in the trust
- Retirement accounts (IRA, 401(k), 403(b), Roth IRA). Retitling these into a trust typically triggers immediate income tax on the full balance. Use beneficiary designations instead.
- Life insurance. Pass by beneficiary designation. The trust can be named as a contingent beneficiary if appropriate.
- POD bank accounts and TOD brokerage accounts. Already pass outside probate by designation.
- Vehicles in some cases. California offers transfer-on-death for vehicles through DMV. Retitling vehicles to the trust is possible but often impractical.
The general principle: retirement accounts and insurance products have their own probate-avoidance mechanism built in. The trust is for assets that would otherwise go through probate.
Funding the trust (the step everyone forgets)
The most common California living-trust mistake isn’t in the drafting. It’s in the funding. A trust holds nothing it wasn’t titled into. A parent can sign a beautifully drafted trust document and then leave the home in their individual name, the brokerage account untitled, the bank account in their own name only. At death, those assets aren’t in the trust. They go through probate, exactly as if the trust didn’t exist.
Funding involves:
- Recording new deeds for real estate (the parent’s attorney typically handles this as part of the engagement)
- Opening trust accounts at banks and brokerages and transferring assets in
- Updating beneficiary designations on retirement and insurance to coordinate with the trust
- Attaching a schedule of personal property identifying which items belong to the trust
- Reviewing the funding every few years and after any major asset change
The pour-over will
The pour-over will is a short companion document to the trust. Its only job is to name the trust as the beneficiary of any asset that ended up in the parent’s individual name at death. If the trust was fully funded, the pour-over will may never need to be used. If an asset was missed (a recently opened account, a forgotten investment, a vehicle), the pour-over will routes it to the trust after probate. The probate is still required for the assets the pour-over will covers, but at least the assets reach the right destination.
Heggstad petitions when funding wasn’t complete
Sometimes a parent dies with an asset still in their individual name that everyone agrees should have been in the trust. The trust documents may list the asset on a schedule, or the parent may have clearly intended to retitle it. A Heggstad petition (named after the 1993 California Court of Appeal case Estate of Heggstad) under California Probate Code § 850 asks the court to confirm that the asset is a trust asset despite the title.
A successful Heggstad petition takes 60 to 90 days and costs a few thousand dollars in attorney fees, much less than full probate. But it isn’t automatic; the trust document needs to support the conclusion. Funding the trust correctly during life is always the better path.
How a trust interacts with Medi-Cal after 2024
Before 2024, families often layered complex structures (irrevocable Medicaid-protection trusts, life-estate deeds) onto their estate planning to qualify a parent for Medi-Cal long-term care benefits without spending down savings. With California’s January 2024 elimination of the asset limit for non-MAGI Medi-Cal, those aggressive structures are usually unnecessary for eligibility.
A standard revocable living trust now does more of the work. It keeps assets out of probate, which means Medi-Cal estate recovery (which only reaches probate estates in California) has nothing to claim against at the parent’s death. It provides incapacity management through the successor trustee. And the trust’s assets remain available to the parent for any care need.
An elder-law attorney can review whether an older irrevocable trust structure (drafted under pre-2024 rules) should be unwound or restructured given the current Medi-Cal framework. In many cases, simplifying back to a revocable trust is the right move.
When a trust isn’t worth the cost
California offers a small-estate affidavit procedure under Probate Code § 13100 and § 13101. When the total value of personal property in the estate is below the statutory threshold (currently $184,500), heirs can collect bank accounts, brokerage assets, and other personal property by affidavit, without opening a probate case. Real estate has separate, lower thresholds for simplified procedures.
For a parent whose major asset is a modest home and whose other savings are below the threshold, a pour-over will plus beneficiary designations and POD/TOD accounts may be enough. Trust drafting in California typically runs $2,000 to $6,000; the math has to work for the cost to make sense.
Choosing the successor trustee
The successor trustee takes over on the parent’s incapacity or death. The choice matters. A successor trustee should be:
- Trustworthy and able to handle financial responsibilities
- Geographically reasonable (a successor trustee three time zones away can still work but adds friction)
- Willing to serve (have the conversation in advance)
- Able to communicate with siblings and other beneficiaries without escalating family conflict
- If no family member fits, a professional fiduciary or a corporate trustee is an option (with corresponding fees)
Talk to a California-licensed estate planning attorney about your specific situation. The drafting is the easy part; the funding, the successor-trustee choice, and the coordination with Medi-Cal and tax planning are where good counsel earns the fee.
Related guides and next steps
- Medi-Cal planning and asset protection after the 2024 asset-limit elimination
- Medi-Cal’s look-back period in California
- Durable power of attorney for an elderly parent in California
- End-of-life planning checklist for California families
- California Advance Healthcare Directive: how it works
- When a parent is on Medi-Cal
This guide explains planning options, not legal or financial advice. Talk to a California-licensed elder-law attorney about your specific situation. California Care Compass does not place referrals on Planning pages.