How to Create a Living Trust in California: A Step-by-Step Guide

A living trust is an essential estate planning tool that can help you manage your assets during your lifetime and ensure a smooth transfer of those assets to your beneficiaries after your death. Unlike a will, a living trust allows your estate to avoid a California probate, offering privacy and potentially reducing the time and cost involved in settling your affairs. Here’s a step-by-step guide to help you understand how to create a living trust in California.

1. Understand What a Living Trust Is

A living trust is a legal document that places your assets—such as real estate, bank accounts, investments, and personal property—into a trust for your benefit during your lifetime. Upon your death, the assets are transferred to your designated beneficiaries by a trustee without going through probate.

2. Decide Between a Revocable and Irrevocable Trust

Meet with an experienced estate planning attorney who can explain the types of trusts available, which one is best suited to your needs, and how to create a living trust in California. Two of the main types of trusts are:

• Revocable Trust: You retain control over the assets in the trust and can amend or revoke the trust at any time. This is the most common type of living trust.
• Irrevocable Trust: Once established, you cannot modify or terminate the trust. It can offer more substantial tax benefits and asset protection but comes with a loss of control over the assets placed in the trust.

3. Identify Your Assets

Take an inventory of all your assets that you want to include in the trust. These might include:

• Real estate properties
• Bank accounts
• Stocks and bonds

Make sure to gather all relevant documentation for each asset, such as deeds, account statements, and titles.

4. Choose Your Beneficiaries

Decide who will receive the assets in your trust after your death. Beneficiaries can include family members, friends, nonprofits, religious or educational institutions, or other entities. You can specify how and when each beneficiary will receive their inheritance.

5. Select a Trustee

You can act as the initial trustee, allowing you to retain control over your assets while you are alive. You will also need to appoint a successor trustee who will take over after your death or if you become incapacitated.

Once the last settlor passes away or becomes incapacitated, the successor trustee is responsible for managing the trust’s assets and ensuring that they are distributed according to your wishes. 

6. Draft the Trust Document

The next step is for your attorney to draft the trust document, which outlines the terms and conditions of the trust, including:

• The name of the trust
• The names of the trustees and successor trustees
• A detailed list of the trust’s assets
• Instructions for managing and distributing the assets
• Any special provisions or conditions

While it’s possible to draft the trust document yourself using online templates, it’s highly recommended to work with an experienced estate planning attorney to ensure that the document complies with California law and accurately reflects your wishes.

7. Sign the Trust Document

Once the trust document is finalized, you’ll need to sign it in the presence of a notary public. A notary public will ask for identification and witness you signing your documents. In California, this step is crucial to make the trust legally binding.

8. Transfer Assets into the Trust

For the trust to be effective, you must transfer ownership of your assets to the trust. This process is known as “funding” the trust. It involves re-titling assets such as real estate, bank accounts, and investment accounts in your name, as trustee of your trust. For some assets, like personal property, you may simply list them in the trust document as being part of the trust.

9. Store the Trust Document Safely

Keep the trust documents in a secure location, such as a safe deposit box or a fireproof safe. Your estate planning attorney should also retain a copy of the documents in your estate planning file.  Make sure your successor trustee knows your attorney’s name, where to find the documents, and how to access them when necessary.

10. Review and Update Your Trust Periodically

Life circumstances change, and your trust should reflect those changes. Review your trust periodically, especially after major life events like marriage, divorce, the birth of a child, the death of a beneficiary, when minor children turn 18, or the acquisition of significant assets. If you have a revocable trust, you can ask your attorney to amend it as needed.

If you’re considering setting up a living trust, consult with an experienced California estate planning attorney to ensure that your trust is tailored to your specific needs and circumstances. By following these steps and seeking professional guidance, you can create a trust that provides peace of mind for you and your loved ones.

If you have any questions about how to create a living trust in California, feel free to contact our law firm.

Law Offices of Daniel A. Hunt

The Law Offices of Daniel A. Hunt is a California law firm specializing in Estate Planning; Trust Administration & Litigation; Probate; and Conservatorships. We've helped over 10,000 clients find peace of mind. We serve clients throughout the greater Sacramento region and the state of California.