Will vs Trust in California: What’s the Difference and Which Do You Need?
Should I make a will or a trust in California? How do I decide?
TL;DR: if you’re in California and have no assets, no kids, and definitely no real estate, and don’t plan to soon, a will may be fine for now. If you have any assets to speak of, especially a total value over $200,000, if you own even a fractional interest in real estate, if you have kids, *or* (NOT “and”) value your privacy, consider a trust.
First off, let’s get a key fact out of the way:
While I have yet to hear of a state where trusts don’t provide advantages over wills, both to the people who create them and their friends, family, and charities, there are differences in state laws that absolutely impact the factors that are key to answering this question. I am an experienced wills, trusts, and probate attorney licensed in California, and there are key differences in other states. And other countries treat trusts very differently to the United States, so if you have ties to countries other than the U.S., you’ll definitely want legal advice from someone qualified to give it in your country. This is more than just a CYA - this stuff absolutely can impact your tax and legal consequences, during your lifetime and for the people you leave behind.
So let’s get into it: will or trust?
Several factors can help you make this decision. If the following seems heavily weighted towards trusts, it’s because there are a lot of advantages to trusts, and the reality is that in California, for a number of reasons, a trust provides more benefits than a will for most people.
Questions to consider:
Do you want someone you trust to be able to manage your assets for you and use them to pay for your care if you become incapacitated?
Yes → Create a trust. While a power of attorney is an important tool for this situation, a trust + power of attorney is far better. It’s easier to manage, allows you to direct not just who helps you out but how they manage your assets and your care, and covers many more “what if’s.” Having a trust isn’t just about planning for others after you’re gone, a trust is also a critical tool during your lifetime.
No → Create a will or do nothing at all. Wills do not have any power and cannot help you during your lifetime. No trust and no power of attorney is awful for those trying to take care of you and terrible for you.
Do you value your privacy? Do you have beneficiaries or heirs who value their privacy?
Don’t want things like details about your assets, your gender, your kid’s gender, who you’re giving your assets to (people or charities)… etc. becoming public record?
Yes → Trust
Wills go through public probate court and become public record. The value of your assets, what you owned, who you gave them to, all public. Whereas only a few key people are entitled to a copy of your trust. There are exceptions, e.g. in case of lawsuits, so make sure your trust is drafted properly and all your assets get put in it. You can learn more about whether a will avoids probate here.
If you’re realizing a trust may make sense for you, you have two options:
Do you have kids? Are they old enough and responsible enough that you would feel comfortable with them inheriting and managing your life savings?
Yes → Definitely consider a trust. Without a trust, the court will appoint a guardian of the estate to manage your kids’ inheritance until they reach the age of 18, and then, here you go, good luck.
Most of us do not have a lot of financial skills and experience by the age of 18, and most of my clients (all except 2 or 3 in 15 years of guiding clients through this work) don’t love the idea of their kids having full access to their inheritance at age 18. With a trust, you get to decide the age, and choose someone else to manage the assets for your kids before that age. Then your trustee, the responsible adult you choose, can use your kids’ inheritance to cover the cost of their education, health care, and living expenses, while managing the assets and making decisions about things like…. Ferrari or Honda?
No → Look to other factors to decide, including privacy desires and the total value and type of assets you own
Do you have pets that you don’t want dumped in a shelter, hoping someone walks past the kittens and puppies and gives your pet as good of care as you did?
Yes → Create a will or a trust or some kind of plan for who you trust to take care of your pets, as well as details for their care, access to your home in an emergency, and any money you want to provide for the pet’s care.
Want more info on pets and the importance of including them in your will or trust, as well as a worksheet to help you plan for them? Download the pet care planning worksheet.
And check out my social media and YouTube for videos on this topic.
Do you have assets around or above $200,000?
Yes → Trust
Why? The threshold for probate court involvement in California right now is $208,850. If you die with more than that value in “probatable assets,” the probate court will need to be involved. Less than that, and there is a streamlined option.
Probatable assets do not include accounts (e.g. life insurance, retirement accounts, and any other accounts that allowed you to name a beneficiary on the account) where you named a valid beneficiary or beneficiaries on the account and they lived longer than you did. If they do not live longer than you, that account is going through probate. If you named your “estate” as the beneficiary, that account is going through probate.
No → A will may be fine for now. Look at other factors. Consider whether you want to plan ahead. If you just want something quick for now and consider a trust later, great - create a will. It’s almost certainly better than nothing. A will does allow you to nominate an executor, name who inherits, and nominate a guardian for your kids, if applicable, though please see the item above about kids and trusts.
Do you own real estate?
Even a portion of real estate (a home, land, etc.), even if “the bank owns it” because you have a high mortgage (that’s not really accurate, and this still applies…)
Yes → DEFINITELY a trust.
Having real estate go through probate is EXPENSIVE in all the ways. Legal fees, executor fees, court fees, property taxes, potentially selling real estate during a probate case, delays associated with probate court requirements….
And if you co-own real estate with others, you can each have your share in your own trust. (Or a joint trust if you’re married to your co-owner.)
If you’re thinking “but what about joint tenancy or community property with right of survivorship?” While those ownership structures can avoid probate in some situations, they come with meaningful downsides, including loss of control over who ultimately inherits and probate exposure after the last surviving owner dies. You can read more about how real property deeds work and where they fall short here.
Do you want to choose who inherits your assets?
Yes → Create a will or trust, see other factors to decide which
No → Do nothing, state law will decide for you. Probably publicly and at great expense.
Do you want to make it easier for the people helping you out a) during your incapacity and/or b) after your death?
Yes → Trust. Trusts are not immediate but they require fewer steps, no court supervision, no waiting for a judge to review before you can do the next things, and usually significantly lower cost to administer.
No → Will, or no documents at all if you really want to make it hard. Wills do not help during your lifetime. After you die, probate court generally takes at least a year, if all goes really well. It’s public. Expensive. Requires that the executor/administrator do a step, wait a month or more, hope it’s approved by the judge and you didn’t miss a checkbox, do another step, wait.
Trusts are, in general, faster, less expensive, more flexible, and as noted above, more private, than wills (because wills mean probate court unless you have basically no assets).
Want a trust but don’t have someone in mind that you trust to manage it when you can no longer do so? Consider a professional trustee. More on that coming soon.
Related resources:
Choosing an executor or trustee
Common estate planning terms and documents
Common mistakes when naming a guardian
Final note
If your situation fits one of the common scenarios outlined above, a DIY option may be a good place to start.
If your circumstances are more complex — or you just want someone (me) to handle it for you — booking a consult is the best next step.