Probate vs. Living Trusts in California: Which Option Is Right for Your Family?

To secure your family’s financial future, it’s essential to plan how your assets will transfer to loved ones after your passing. In California, there are two common ways your estate can be transferred: probate or living trust. While probate is the default approach, setting up a living trust could be the better option depending on the size of your estate, family dynamics, and other factors. Learn the difference between probate and living trust in California to ensure you make the right choices for your estate.

What Is Probate in California?

Probate is the default form of estate distribution in California and involves:

• Validating the decedent’s will
• Paying all taxes and debts
• Distributing assets to heirs

It is governed under California Probate Code and occurs when there is no trust in place. Probate may be appropriate under some circumstances, but is a public and lengthy process that can be avoided with proper estate planning.

How Probate Works in California

The California probate process begins when a petition is filed in the deceased’s county of residence. It is managed either by the executor of the will or by a court-appointed administrator if no executor is named. Key steps in the probate process include:

1. Filing for probate: A petition for probate is filed with the court. Either the executor or a court administrator is appointed to manage the remainder of the process.
2. Appraisal of assets: All of the deceased’s assets are inventoried and appraised. A professional appraiser is usually required for appraising real estate.
3. Debt claims: Creditors have 4 months after the probate notice is posted to collect on outstanding debts.
4. Distribution of assets: Assets are distributed to beneficiaries after all debts, taxes, and fees have been subtracted from the estate.
5. Estate closure: The court provides final approval to close the estate and wrap up the probate process

Pros and Cons of Probate

Pros:

• Court supervision ensures a smooth process
• Creditors have a clear cutoff for collecting debts, protecting beneficiaries in the future
• Contested estates can be resolved in court, reducing friction

Cons:

• Costly and time-intensive
• Public process in which family details are exposed
• Probate costs in California can considerably reduce estate value

Probate can be appropriate in straightforward cases, but it is often burdensome for families that prioritize a rapid and private resolution of the estate.

What Is a Living Trust in California?

A revocable living trust is a financial vehicle used in California inheritance law that transfers your assets into a trust while you are still alive. You remain the trustee and maintain full control, but successors are clearly named who will manage your estate in the case of death or incapacitation.

How Living Trusts Work in California

Working with an estate planning lawyer, you draft a trust document that retitles your assets and provides specific instructions for distribution. This process specifically names one or more successors who will be responsible for privately distributing your assets upon death — without any court involvement.

How to Set Up a Living Trust in California

Avoiding probate in California requires setting up a living trust by following the proper legal procedure with the help of an attorney. This is one of the situations in which hiring a competent estate planning or real estate attorney is absolutely vital. They’ll provide guidance through the entire process, including:

• Naming you as the trustee or grantor
• Naming specific beneficiaries in your will
• Selecting a successor trustee to step in when needed

While courts in California will essentially hold your hand through the probate process, no such system exists for establishing a revocable living trust. And it’s important to remember that without a living trust, your estate will be handled by probate by default.

Pros and Cons of Living Trusts

Pros:

• The only way to avoid probate under California law
• Maintains privacy when handling your estate
• Provides safeguards in the case of incapacity
• Easy to amend if needed

Cons:

• Must be properly funded at the outset
• Reasonably high initial costs
• Must be amended if new assets are acquired

Living trust benefits in California become greater the larger the size of your estate. A revocable living trust is also the right choice if you value efficiency or privacy when managing your estate.

Key Differences Between Probate and Living Trusts

When establishing the differences between pursuing a probate will vs. trust in California, there are a few important factors to consider:

Timeline

In California, the probate process can take a year or more to resolve. Living trusts, however, allow distribution of assets within weeks, and no court involvement is necessary.

Cost

Probate fees can reach tens of thousands of dollars depending on the size of the estate. Living trusts, however, only involve the original setup fee with an attorney, potentially resulting in considerable savings depending on the size of your estate.

Privacy

Managing an estate through probate becomes a matter of public record, revealing assets and beneficiaries. Living trusts, however, are fully private matters.

How to Choose Between Probate and a Living Trust

To decide whether probate or a living trust is ideal under your circumstances, you’ll need to consider family dynamics, the value of your estate, the potential that you’ll be incapacitated, and more.

Family Considerations

If there is any potential of beneficiaries contesting the will, a living trust provides more guaranteed protection of your choices than the probate process can offer.

Estate Value

A living trust is generally the best approach with estates valued at $1 million or more. Probate is more appropriate with smaller estates.

Incapacity

Living trusts provide continuity in the case you are incapacitated. The probate process, on the other hand, only begins after you’ve died.

Probate vs. Living Trust in California: The Bottom Line

While probate can be a costly or lengthy process, it’s not so burdensome in the case of smaller estates. For larger or potentially contested estates, however, living trusts provide a more comprehensive guarantee that your assets will be distributed according to your will. Ask a professional estate planner today to determine which approach is best suited to your needs.

Rely on Marinaccio Law for Your Estate Planning Needs

As trusted real estate and estate planning lawyers in Los Angeles, Marinaccio Law is here to provide expert consultation on probate, living trusts, and more. Whether you need an estate planning attorney in Glendale or anywhere else in the LA area, call us today to make sure your estate is distributed according to your exact wishes.

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