Who This Guide Is For
If you’re a California resident managing assets in the Golden State, you’re likely concerned about protecting your family’s financial future while navigating California’s complex probate system. Whether you’re:
Planning ahead to avoid costly probate proceedings for your loved ones
Worried about maintaining control over your assets during incapacity
Seeking privacy and protection for your family’s inheritance
Looking for a comprehensive estate planning solution that covers both legal structure and financial management
This guide will walk you through the six types of revocable trusts available in California and help you determine which approach best protects your family.
What Is a Revocable Trust and Why Do California Families Need One?
A revocable trust (also called a living trust) is a legal arrangement that allows you to maintain complete control over your assets during your lifetime while establishing clear instructions for how those assets will be managed if you become incapacitated or after you pass away.
The key advantage: Unlike a will, a properly funded revocable trust helps your family avoid California’s probate process, which can take 12-18 months and cost 3-7% of your estate’s value in attorney and court fees.
The 6 Types of Revocable Trusts for California Estate Planning
1. Individual Revocable Trust
Best for: Single individuals or those with separate property
An individual revocable trust is created and controlled by one person. You serve as the trustee during your lifetime, maintaining complete control over all assets placed in the trust. Upon your death or incapacity, a successor trustee you’ve named takes over management according to your instructions.
Real-world use case: Sarah, a divorced professional in Sacramento, uses an individual revocable trust to ensure her adult children from a previous marriage inherit her home and retirement accounts without court intervention. The trust allows her to modify beneficiaries as circumstances change.
2. Joint Revocable Trust (Married Couples)
Best for: Married couples with shared assets and aligned estate planning goals
California married couples typically establish a joint revocable trust where both spouses serve as co-trustees. This arrangement is particularly valuable in California, a community property state, as it simplifies the management of jointly-owned assets.
Key benefits:
Streamlined administration when the first spouse passes away
Clear management structure if one spouse becomes incapacitated
Simplified recordkeeping for community property
Coordination with California’s community property tax basis rules
Real-world use case: Mark and Jennifer, a couple in their 50s from Fair Oaks, established a joint revocable trust to manage their family home, investment properties, and business interests. When Mark suffered a stroke, Jennifer seamlessly continued managing all trust assets without court involvement.
3. AB Trust (Bypass Trust)
Best for: Wealthy couples seeking to maximize estate tax exemptions
An AB trust divides into two separate trusts upon the first spouse’s death: Trust A (the survivor’s trust) and Trust B (the bypass or credit shelter trust). While federal estate tax exemptions are currently high ($13.61 million per person in 2024), California families with substantial estates still use AB trusts for:
Protecting assets from the surviving spouse’s future creditors
Ensuring assets ultimately pass to intended beneficiaries (important in blended families)
Preparing for potential future decreases in exemption amounts
Important consideration: AB trusts require more complex administration after the first death and may not provide the same favorable tax treatment they once did under current law.
4. QTIP Trust (Qualified Terminable Interest Property Trust)
Best for: Blended families or second marriages where you want to provide for your current spouse while preserving assets for children from a previous relationship
A QTIP trust allows you to provide income (and potentially principal) to your surviving spouse during their lifetime, while ensuring that remaining assets pass to your designated beneficiaries (typically your children) after your spouse’s death.
Real-world use case: Robert, remarried with adult children from his first marriage, used a QTIP trust to ensure his second wife could live comfortably in their Los Angeles home and receive income from his investments, while guaranteeing his children would ultimately inherit the family business he built over 40 years.
5. Disclaimer Trust
Best for: Couples seeking maximum flexibility based on tax laws and family circumstances at the time of death
A disclaimer trust provides flexibility by allowing the surviving spouse to “disclaim” (refuse) certain assets after the first spouse’s death. Disclaimed assets then pass into a separate trust rather than directly to the surviving spouse.
Why choose this approach: Tax laws and family circumstances change. A disclaimer trust lets your surviving spouse and family make optimal decisions based on:
Current estate tax exemption amounts
The surviving spouse’s financial needs
Creditor protection requirements
Beneficiary circumstances at that time
Note: The disclaimer must be made within 9 months of death and before the surviving spouse benefits from the property.
6. Special Needs Trust (Within a Revocable Trust)
Best for: Families with a disabled beneficiary who receives or may receive government benefits
California families can include special needs trust provisions within their revocable trust to provide for a disabled loved one without disqualifying them from means-tested government benefits like Medi-Cal or SSI.
Critical planning points:
The special needs trust becomes irrevocable upon your death
Funds must be administered by a trustee (not the beneficiary) for supplemental needs
Careful coordination with California’s public benefits programs is essential
Real-world use case: The Martinez family in San Francisco included special needs trust provisions for their adult son with autism. The trust provides for his quality of life—funding therapy, recreation, and personal care—while preserving his eligibility for essential government healthcare and disability benefits.
How Do I Choose the Right Revocable Trust for My California Family?
Selecting the optimal revocable trust structure depends on several factors specific to your situation:
Consider Your Marital Status and Family Structure
Single or divorced: Individual revocable trust
First marriage with shared goals: Joint revocable trust
Blended family: QTIP trust or separate trusts with specific provisions
Children with special needs: Include special needs provisions
Evaluate Your Estate Size
Under $13 million: Simple individual or joint revocable trust typically sufficient
Over $13 million: Consider AB trust or disclaimer trust for tax planning flexibility
Uncertainty about future tax laws: Disclaimer trust provides maximum flexibility
Assess Your Control and Flexibility Needs
All revocable trusts allow you to maintain control and make changes during your lifetime
You can modify beneficiaries, add or remove assets, or even revoke the trust entirely
Upon death, the trust becomes irrevocable and carries out your wishes
What Makes Revocable Trusts Essential for California Residents?
1. Avoid California’s Costly and Time-Consuming Probate Process
California probate is particularly burdensome compared to other states:
Timeline: 12-18 months minimum, often longer for complex estates
Cost: Statutory fees of 3-7% of the gross estate value (not net value)
Public record: All probate proceedings become public information
Court supervision: Requires multiple court appearances and approvals
Example: A $1 million estate (a modest single-family home in many California markets) would incur approximately $46,000 in statutory probate fees alone, plus additional costs. A properly funded revocable trust avoids these expenses entirely.
2. Maintain Privacy for Your Family
Unlike wills (which become public record through probate), revocable trusts remain private documents. Your family’s financial affairs, asset distribution, and beneficiary information stay confidential.
3. Plan for Incapacity with Seamless Continuity
If you become incapacitated, your designated successor trustee can immediately step in to manage your financial affairs without requiring a court-supervised conservatorship—a process that can cost $10,000-$15,000 initially and thousands more annually.
4. Provide Clear Management Instructions During Life and After Death
Your trust document specifies exactly how your assets should be managed and distributed, eliminating ambiguity and reducing the potential for family disputes.
The Critical Step Most California Residents Miss: Trust Funding
Creating a revocable trust is only the first step. The trust must be properly “funded” by transferring ownership of your assets into the trust’s name. An unfunded trust provides no probate avoidance benefits.
Assets That Should Be Transferred to Your Trust:
Real property (your home, rental properties, land)
Bank and investment accounts
Business interests
Valuable personal property (vehicles, collectibles, artwork)
Assets Handled Through Beneficiary Designations:
Life insurance policies (name the trust as beneficiary if needed)
Retirement accounts (IRA, 401k)—special rules apply
Transfer-on-death (TOD) accounts
Common mistake: Many California residents create a trust but fail to retitle their home or other major assets. This oversight means these assets still go through probate, defeating the primary purpose of the trust.
How California Probate and Trust, PC Helps You Protect Your Family’s Future
For over a decade, California Probate and Trust, PC has helped thousands of California families establish comprehensive estate plans that provide both legal structure and financial management clarity. Our approach is different:
Free 1-Hour Estate Planning Consultation
We begin with a no-obligation consultation to understand your family dynamics, assets, and goals. This conversation helps us recommend the specific trust structure that addresses your unique situation.
Transparent, Fixed-Fee Packages
