A living trust is an estate planning tool that works well for complex estates, families with children, pets, or dependents with special needs. If you are creating an estate plan, you may be wondering about the pros and cons of living trusts in California. Seeking advice from an estate planning lawyer helps prevent errors in trust creation and helps you understand how to properly fund and manage the trust.

The Pros of Using a Living Trust for Estate Planning in California

Living trusts provide valuable estate planning benefits, especially for residents with high incomes and assets.

The benefits of living trusts include being able to: 

• Skip the probate process and reduce costs to beneficiaries
• Reduce estate, gift, and income taxes
• Offer control over assets while you are alive
• Protect privacy as trusts are not a public record

The Cons of Using a Living Trust for Estate Planning in California

Depending on your goals, there may be instances where a trust is not the most suitable option for you.

The cons of creating a living trust in an estate plan include: 

• Cost of creation, updates, and management over your lifetime

• Require you fund and transfer assets into the name of the trust
• Require ongoing maintenance to ensure accuracy of all assets
• Affect tax benefits that kick in after your death

It is advised to request legal advice from a seasoned estate planning attorney to examine your goals and unique circumstances to determine if a trust is right for you.

Types of Trusts Available in California

California trust laws allow for the creation by a trustor of the following types of trusts:

• Revocable. A revocable trust is created while the trustor is alive. The trustor updates, edits, and funds the trust.
• Irrevocable. An irrevocable trust cannot be modified once created. The trustor signs over all rights to alter or terminate the trust during their lifetime.
• Testamentary. A testamentary trust is created under a will and takes effect when the trustor dies.
• Special Needs. A trust meant to provide for and protect disabled individuals.
• Charitable. Passes income to charities listed after your death.
• Spendthrift. Protects beneficiaries who have poor spending habits by controlling how a trustee distributes their funds.
• Qualified Personal Residence (QPRT). Transfers a home or other real estate to heirs at a reduced gift tax.

Living trusts in California are a valid form of estate planning to protect assets and control their distribution when you die. Estate planning involves making legal and financial decisions that directly impact the livelihood of your family, pets, or other beneficiaries. Consider hiring a qualified and experienced attorney licensed in the state of California for optimal results.

Understanding California Trust Laws

When creating a living trust in California, it is important to understand California trust laws, including updates. Hire a trust lawyer and verify their credentials before scheduling a consultation. Living trust scams are prevalent in California due to the size of some residents’ financial estates.

Be cautious when using products on the internet to build trusts, or from companies selling annuities, or offering promissory notes in exchange for cash investments. Protect yourself, your family, and your assets by hiring a known and established trust lawyer like Paul V.L. Campo Attorney at Law. Paul has over 30 years of estate planning legal experience, and he is well-versed in the intricacies of creating valid, enforceable trusts in California.

Why Hire a Trust Lawyer?

In 2025, many Americans surveyed were still in need of estate planning, with only 13% having established a trust. When you hire a trust lawyer, such as Paul V.L. Campo Attorney at Law, they can advise you on the strategies most suitable for your estate. They can ensure your assets are protected and your wishes carried out as intended. A knowledgeable attorney can help manage a living trust and provide legal representation for disputes.

Paul V.L. Campo is dedicated to helping those in our community create enforceable, thorough, and detailed estate plans that will see their legacy protected and their families cared for after they are gone. You can trust the advice of a seasoned estate planning attorney with over three decades of experience.

FAQs

Q: What Is the Biggest Downside of a Living Trust in California?

A: The biggest downside of a living trust in California is leaving it empty after the document is created. A living trust is worthless unless all your assets, including real estate properties, are re-titled into the trust’s name. If you fail to transfer assets into the trust, like bank accounts, investments, retirement accounts, or other financial assets, they won’t be included in the trust and will go through probate.

Q: What Are Common Problems With Living Trusts?

A: There are some common problems with living trusts. One is the hassle of funding the trust by transferring assets into it. The more assets you have, the larger the workload. Living trusts also tend to be more expensive to set up and more work to properly manage. You must manage a living trust like an active account, where you may have to make changes or updates.

Q: Do You Have to Pay Taxes on a Living Trust in California?

A: Yes, you must pay taxes on the income from a living trust in California while you are alive. During your life, you are considered the owner of the trust and are responsible for paying taxes on income generated from assets in the trust. After your death, taxes must be paid on any income earned by the trust, and your beneficiaries will pay taxes on all distributions. The trustee must pay for any income the trust retains.

Manage a Living Trust to Your Advantage With Paul V.L. Campo Attorney at Law

Living trusts are excellent for people with significant assets who want to avoid probate in California. However, a trust is only as good as the legal experience and guidance given to create and manage it effectively.

When you are looking to create a living trust or determine if it is right for you, hire a trust lawyer with over 30 years of experience in California estate planning law. Contact us to schedule a consultation and get started.