Frequently Asked Questions

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A living trust can avoid probate, if your assets have been re-titled into the name of the trust. The probate process is used to pass assets from one generation to the next in cases where the person has no documents, or only has a Will covering assets for an estate in excess of $208,850. Probate takes a minimum of six months, and frequently longer. The cost of probate is two-fold—Court costs in California are now about $1,500. The attorney’s fees and executor’s fees are based on the size of the estate.

There is no magic number for how much money one has to have before a trust is the right decision. We usually look at whether the person owns a home or other real estate, or has significant savings. The trust gives you the ability to control not only who will receive assets from you, but also when. For example, if you want to leave money to a child or grandchild, 18 is the legal age when a child can inherit. However, this is typically not the best time for a child to receive a large sum of money. When you create a trust you can control when the child is able to receive the money, and what the money can be used for.

California has a rule that if the document was valid in the state where it was created, we will honor it in California. All 50 states recognize a living trust, although other countries do not. If you move out of state you should have your documents reviewed in the state where you reside permanently.

Some assets, like IRAs and 401K accounts, cannot be held by your trust. Those assets will pass to your heirs with a proper beneficiary designation and will not have to go through probate. You may name your trust as the beneficiary on an IRA or 401K, if you have minor children and want to control how the money is paid out to them.

The current annual exclusion (for 2025) for gifts is $19,000 per person, per year. However, if you give more than $19,000 to an individual in a single year, you are required to report the gift to the IRS using Form 709. This does not mean the gift is taxable—it simply means that the amount over $19,000 will begin to count against your lifetime gift and estate tax exemption, which is $13,990,000 for a single person or $27,980,000 for a married couple in 2025. For the vast majority of people, these exemption thresholds are never exceeded, so no gift taxes are actually owed, just reported.

In most cases, inherited cash is not considered taxable income for federal income tax purposes. Instead, the estate of the person who passed away may be subject to estate taxes if the total value of their estate exceeds $13,990,000 (the 2025 exemption for individuals). However, certain inherited retirement accounts, such as IRAs or 401(k)s, may be taxable to the beneficiary. If the original account owner had not yet paid taxes on the funds, then you (as the beneficiary) will typically pay taxes on the distributions you take from the account. To minimize your tax burden, it’s a good idea to speak with a financial advisor or tax professional, who can help you explore options like spreading distributions over time.

All business owners need to document an exit strategy for what happens to the business when they want to retire, or are forced to leave because of disability or death. This is called a Business Succession Plan. Of primary concern will be whether or not the business will continue or be sold, and if remaining assets will be dispersed. Also, it is wise to provide for income and liability protection for the departing owner. Like other estate plans, Business Succession Plans need to be reviewed on a regular basis to make sure they cover all relevant issues and concerns.

It’s a good idea to review and update your estate plan every 3-4 years to ensure it still reflects your wishes and any changes in your life or the law. Major life events such as marriage, divorce, the birth of a child, changes in financial status, or the passing of a beneficiary or executor may also require an update sooner.