KEY TAKEAWAYS
- A will does not avoid probate — it triggers it. Probate costs approximately 5% of the fair market value of all your assets and can take two years or more in California’s backlogged courts.
- A revocable living trust does not mean giving up control. While you are alive and of sound mind, you remain the grantor, the trustee, and the primary beneficiary — you are simply wearing a manager’s hat.
- A trust must be funded to work. A beautifully drafted trust document with no assets transferred into it is essentially useless — and the unfunded portion will go through probate.
- Living trusts are not just for wealthy families. Any California family that owns real property, has minor children, or carries a significant life insurance policy has a compelling reason to have one.
- California’s Proposition 19 rules around property tax reassessment require careful trust structuring — getting this wrong can cost a family their inherited tax basis permanently.
Living trusts are one of those estate planning topics that people think they understand — until they sit down with an attorney and realize how much they had wrong. In this episode of Legacy Protected, Romelia “DeDe” Soto of The Soto Law Group walks through everything families in Newport Beach, Huntington Beach, and Irvine need to know about California living trusts: what they actually do, what they don’t do, and why so many Orange County families who thought they were covered find out too late that they weren’t.
DeDe’s practice spans estate planning, probate, trust administration, conservatorship, special needs trusts, business succession, and real estate deed transfers — and living trusts sit at the center of nearly every plan she builds.
What People Get Wrong Before They Even Walk In
DeDe Soto: People get a lot of things wrong. If they’re coming through a financial advisor, they’re usually a bit more informed. But if they’ve only been researching online, many come in believing they don’t need a trust because they don’t have enough assets — they just need a will. We get calls all the time from people saying “I need a will,” and then we ask, “Do you own real property?” And yes, they own real property — usually anywhere from half a million to a million dollars at the baseline. If you have that, you really need both a revocable trust and a will.
Other common misconceptions: people think they need an irrevocable trust instead of a revocable one, or they’re afraid that putting assets into a trust means giving up control of them while they’re alive. And then there’s the group that has a trust but thinks they’re completely done — they’ve missed the critical piece of funding it, which we’ll get to.
The events that usually send people through the door? It’s an accumulation. A marriage, a divorce, a retirement. A neighbor going through probate. A grandparent who became incapacitated. A milestone birthday — turning 40, 50, 60, or 70. Sometimes it’s someone about to leave the country who calls saying they need a trust before their flight next week. The timeline doesn’t always work, but the instinct is right. It can never be too early to plan — but it absolutely can be too late.
Why a Will Alone Won’t Protect Your Family
DeDe Soto: A will does not avoid probate — it actually triggers it. I think a lot of people assume that having a will means they’ve handled everything. But a will cannot hold title to assets. It merely instructs who should receive them. And before any of your beneficiaries see a dollar, the probate court takes approximately 5% of the fair market value of all your assets. For a $500,000 home alone, that’s $25,000 in fees.
Beyond the cost, probate is a public process. When a will is filed with the court, your financial affairs become accessible to anyone. Creditors can step forward and make claims before beneficiaries receive anything. And if there’s any ambiguity — a blended family situation, siblings interpreting things differently, a child from a prior marriage — it becomes the judge’s problem to sort out. That means litigation, and that means time.
California’s courts are extremely backlogged right now. Straight probate with no disputes used to take about a year. Now it’s a minimum of two years. We currently have a matter that opened in 2021 that still has not resolved — and the trial is set for next year. Adding litigation to probate isn’t just expensive. It’s exhausting for everyone in the family.
And here’s what most people don’t realize: a will does absolutely nothing for you while you’re alive. It is submitted to probate court only after you pass. If you become incapacitated tomorrow, your will cannot help anyone manage your finances or make decisions on your behalf.
What a Revocable Living Trust Actually Does
DeDe Soto: A revocable living trust in California is a private legal document — similar to a contract or an entity — but it’s created by you, for you. While you’re alive and of sound mind, you hold three roles simultaneously: you’re the grantor, the owner who created the trust; you’re the trustee, the manager of the assets; and you’re the primary beneficiary. Assets don’t pass to your heirs until after you pass.
So when people worry about losing control by putting assets into a trust — that concern is unfounded. You’re not giving anything away. You’re simply wearing a different hat. I always say I should get a cap that says “Trustee” — because that’s what you are: the manager of your own assets.
And if you become incapacitated, your successor trustee steps in and continues managing the trust — paying bills, managing investments, overseeing real property, handling brokerage accounts — all without any court involvement. That seamless transition is one of the most important things a living trust provides, and it’s something a will simply cannot replicate.
The trust can also hold title to LLCs, limited partnerships, and corporations. All of your entities and interests can be pulled together under one umbrella — your revocable trust — so that everything is organized, protected, and ready to pass without going through probate.
Revocable vs. Irrevocable: Which One Do You Actually Need?
DeDe Soto: I always say that all planning — no matter if you have $150,000 or $150 million — starts with laying the foundation, and that foundation is the revocable living trust. It’s fully amendable. If you create it at 35, you might add children later. You might change the beneficiaries, change the trustees, adjust the distribution terms. You remain in control throughout your lifetime.
An irrevocable trust is a different tool entirely — and it’s a layer you add on top of the revocable foundation, not a replacement for it. With an irrevocable trust, you are giving up control. The assets are permanently transferred out of your estate. You cannot serve as trustee. A common example: grandparents who want to gift a million dollars to a grandchild at birth — getting those assets out of their taxable estate. Once it’s done, it’s done.
The confusion between these two is one of the most common mistakes people make when they research living trusts online. Always start with the revocable. Build from there.
Funding Your Trust — The Step That Actually Makes It Work
DeDe Soto: Having a trust document is not enough. The trust has to be funded — meaning you actually transfer title of your assets into it. If we’re talking about a home, the deed changes from your personal name to, say, “The Smith Family Revocable Trust, John Smith as Trustee.” The title actually changes.
I hear this concern all the time in California: “Won’t that trigger a property tax reassessment?” No — and this is important. A revocable trust is a pass-through entity. California does not treat transferring property into your own revocable trust as a change of ownership for reassessment purposes. Your property taxes are not affected.
For brokerage accounts, the account is retitled in the trust’s name. For LLCs and partnerships, the membership or partnership interest is assigned to the trust. For life insurance, the trust is named as the beneficiary — the policy itself doesn’t need to be held in the trust’s name because you haven’t collected those funds yet.
Your personal checking account is a little different. You can name the trust as the beneficiary without retitling the account itself — unless you’re 85 or older, in which case we would usually recommend full retitling.
What happens when someone creates a trust and never funds it? I see this constantly. Someone brings in a thick binder, and when I look inside, nothing is in the trust. No assets transferred. Beautiful document, completely hollow. Any asset that sits outside the trust at the time of death goes through probate.
The Pour-Over Will — Why You Still Need One
DeDe Soto: A living trust doesn’t completely replace a will — and here in California, we always draft both. When someone has a trust, the will becomes what’s called a pour-over will. Its beneficiary is the trust itself, not individual people. Any asset that isn’t inside the trust at the time of death “pours over” into the trust and is then distributed according to its terms.
Think of it this way: what if you won the lottery, and then passed away before you had a chance to collect or transfer those winnings? Those funds are in your estate. Your executor would need to open probate to collect them. But with a pour-over will, those funds would eventually flow into your revocable trust and be distributed the way you intended — rather than going through intestate succession, where the court decides who your heirs are and what percentage each receives.
The pour-over will is the safety net. It catches what the trust couldn’t hold at the time of your death.
The Real Benefits of a Living Trust Go Far Beyond Probate
DeDe Soto: Beyond avoiding probate, a living trust gives you something that a will simply cannot: structured, protected distribution to your beneficiaries.
Through probate, children receive everything outright at 18. That’s it — the court is done, and the money is theirs. But a trust lets you distribute in stages. One-third at 25, one-third at 30, the balance at 40. Or you can tie distributions to life events — graduating college, getting married, having children. You decide the terms.
We can also create sub-trusts within the trust for each of your children. And this is where the “protective coating” concept becomes really valuable. Let’s say your child inherits $2 million and later goes through a divorce. If that inheritance was kept in a sub-trust and never commingled with community property funds, it is protected. In California, an inheritance is sole and separate property — but the moment it’s mixed with community assets, that protection disappears. The sub-trust prevents that from happening.
You can also build in bloodline protections — structuring the trust so that assets pass only to your children, grandchildren, and future generations. You can require a prenuptial or postnuptial agreement as a condition of distribution. You can specify what the trust will and will not pay for — college tuition, a home down payment, health and maintenance expenses — and what it won’t fund. And the trust remains private throughout. A will filed with the court becomes public record. A trust never does.
Blended Families, Spousal Death, and the Bucket Strategy
DeDe Soto: When one spouse passes in a joint trust, the estate typically splits into two or three separate buckets. Here’s a common scenario: a husband passes and leaves a $5 million life insurance policy. His portion goes into an irrevocable marital trust. The surviving spouse receives all income from that policy for her lifetime — but she cannot touch the principal. When she passes, the principal distributes to the designated heirs, whether that’s joint children, children from a prior marriage, or a combination.
This structure also protects against remarriage. If the surviving spouse remarries, the assets held in the deceased spouse’s bucket do not become community property with the new partner. They are held separately and protected.
And here is something I have to say directly: this level of planning cannot be accomplished with an online template. This is exactly where having experienced counsel makes the difference.
Proposition 19, Multi-State Property, and Orange County Specifics
DeDe Soto: For Newport Beach and Orange County families — who often have real estate, investment accounts, and business interests — the trust structure has to be built carefully around California’s rules.
Under Proposition 19, a primary residence can be transferred to a child while maintaining the parent’s property tax basis — but only if the distribution is structured correctly. If you have three children and want to leave the home to one of them, the other two need to receive assets of equal value from other sources (like a brokerage account) for the Prop 19 protection to hold. If the division is unequal, the tax basis gets reassessed. If there aren’t enough liquid assets to equalize the distribution, the trust can be structured to take a loan — but this has to be done with intention and proper planning.
For families who split time between California and another state — a primary home in Newport Beach and a vacation property in Montana or Wyoming, for example — a California revocable living trust can hold all of those properties. That means one trust, one state, and no need to open separate probate proceedings in every state where you own real estate.
Who Actually Needs a Living Trust — And What It Costs to Wait
DeDe Soto: A living trust is not only for the wealthy. The California probate threshold is approximately $208,850. But even below that, any family with minor children, any family that just bought their first home, and any family carrying a significant life insurance policy has a compelling reason to have a trust. If the unthinkable happens and there is no trust, a child could receive millions of dollars at 18 — with no structure, no protection, and no guidance.
The cost comparison speaks for itself. Probate fees run approximately 5% of the fair market value of all assets. A $500,000 home means $25,000 in probate fees alone. A full estate plan — revocable trust, pour-over will, durable power of attorney, and healthcare directives — typically runs between $4,000 and $6,000, depending on complexity.
And the most expensive mistake of all? Waiting until it’s too late. Establishing a revocable living trust requires contractual capacity — a higher legal standard than what’s needed for a will. If cognitive decline has already begun, we may not be able to create the trust at all. At that point, probate becomes the default. Review your trust every three to five years. Make sure your assets are actually inside it. Make sure the people named still reflect your wishes. And don’t wait for a crisis to find out you weren’t as protected as you thought.
Is Your Living Trust Actually Working for You?
If you have been putting off estate planning, or you have a trust that you haven’t looked at in years, Romelia “DeDe” Soto and the team at The Soto Law Group are ready to help you find out where you stand — and what it takes to get fully protected.
Serving families across Newport Beach, Huntington Beach, Irvine, and greater Orange County, The Soto Law Group brings deep experience in living trusts, estate planning, probate avoidance, and the California-specific rules that affect how your assets pass to the people you love.
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