Do You Really Need A Living Trust?

Almost everyone in California has heard they should have a living trust. Far fewer are told plainly why, or when a trust is genuinely unnecessary. Here is the honest answer, including the case against one.

The core reason: avoiding probate

If you die owning assets in your own name, and those assets exceed California's small estate threshold, your family goes through probate. Probate is the court supervised process of proving the will, paying creditors, and distributing what remains. It is public, it is slow, and in California it is unusually expensive.

The expense surprises people, because California sets attorney and executor compensation by statute as a percentage of the value of the estate, starting at four percent of the first $100,000 and stepping down from there. Critically, that percentage is calculated on the gross value, not on your equity. A home worth $1.2 million carrying a $900,000 mortgage counts as a $1.2 million asset for fee purposes, not a $300,000 one. Both the attorney and the personal representative can each claim a statutory fee, and extraordinary services can be billed on top of that.

Time is the other cost. A straightforward Los Angeles County probate commonly runs a year or more. During that period the house generally cannot be sold without court involvement, and the beneficiaries wait.

A properly funded living trust avoids all of it. Assets titled in the trust pass under its terms without a court, without statutory fees, and without the delay.

Privacy, incapacity, and control

Probate avoidance is the headline, but three other benefits matter just as much for some families.

Privacy. A probated will becomes a public court record. Anyone can look up what you owned and who received it. A trust stays private.

Incapacity planning. A will does nothing while you are alive. A living trust names a successor trustee who can step in and manage your affairs if you become unable to, without a conservatorship proceeding. For many families this turns out to be the provision they actually use.

Control over timing. A trust can hold and distribute assets over time rather than handing a young beneficiary everything at once, and it can protect a beneficiary who has creditor problems, an unstable marriage, or a disability that an outright inheritance would jeopardize.

When you may not need one

Estate planning professionals rarely say this out loud, so we will: a living trust is not universally necessary.

If your total estate falls below California's small estate threshold, simplified transfer procedures may handle everything without probate or a trust. If your significant assets are retirement accounts and life insurance, those pass by beneficiary designation and never touch probate regardless of whether you have a trust. If you own no real property, your exposure is much smaller, because real estate is usually what pushes an estate over the threshold in the first place.

The general rule we apply: the more real property you own, and the higher the total value climbs, the more clearly the math favors a trust.

The mistake that undoes the whole plan

Signing a trust is not the same as funding one, and unfunded trusts are the most common failure we see.

A trust controls only what has been transferred into it. If your home is still titled in your individual name at death, the trust does not govern it, and your family ends up in the probate you paid to avoid. This happens constantly after refinances: the lender asks that title be moved out of the trust to close the loan, and nobody moves it back.

So the plan requires follow through. Real property needs a deed into the trust. Bank and brokerage accounts need to be retitled. Assets acquired later need to be taken in the trust's name. And the whole plan deserves a review every few years, particularly after a refinance, a purchase, a marriage or divorce, or a death in the family.

Where an asset was clearly meant to be in the trust but never made it there, California offers a repair mechanism: a petition asking the probate court to confirm the asset belongs to the trust, commonly called a Heggstad petition. It works, but it is litigation, and it costs considerably more than the deed would have.

What a complete plan includes

A living trust does not travel alone. A complete California estate plan generally pairs it with a pour-over will to catch assets left outside the trust, a durable power of attorney for financial matters, an advance health care directive, and current beneficiary designations on retirement accounts and life insurance. The trust is the centerpiece, not the entirety.

Talk to a Los Angeles trust attorney

The Darvish Firm advises Southern California families on wills, trusts, and estates, and our trust litigation attorneys handle the disputes that arise when a plan was poorly drafted, never funded, or challenged after death. To review whether a trust makes sense for your situation, call (310) 677-3512 or request a consultation.

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Every case depends on its facts. Consult an attorney about your specific situation.