Avoiding California Probate: Why a Revocable Living Trust Is Essential

Starting April 1, 2025, California increased the small estate affidavit threshold from $184,500 to $208,850 to account for inflation. Under Probate Code §890, estates valued above this limit may trigger a formal probate process.

This estate value includes:

• Real estate, financial accounts, business interests, and personal property held solely in the decedent’s name.
• It excludes assets with named beneficiaries, such as retirement accounts, life insurance policies, and payable-on-death accounts, but only if valid, up-to-date beneficiary designations are in place with financial institutions.

For estates exceeding this new $208,850 threshold, proactive planning is critical for California families, where home values alone often exceed $1 million.

The High Cost of Probate in California

Probate in California is often expensive, time-consuming, and stressful for families. When someone passes away without a properly funded revocable living trust, their assets must generally go through probate, a court-supervised process to settle debts, verify heirs, and distribute property.  In California, this can take anywhere from 18 months to 3 years.

Unfortunately, probate costs are statutorily set by California law under Probate Code §§10800–10810. Attorneys and executors are each entitled to the same percentage-based fees based on the gross value of the estate, not the net equity. That means even if you have a mortgage, probate fees are calculated on the full property value.

Here’s how the statutory fee structure works:

• 4% of the first $100,000
• 3% of the next $100,000
• 2% of the next $800,000
• 1% of the next $9,000,000
• .5% on the next 15,000,000

This means probate costs quickly escalate, especially for homeowners in California where property values are high. Here’s an example of total costs (attorney + executor fees, excluding filing/admin expenses):

In addition, no one has the legal authority to manage or transfer the assets of the estate until the court appoints an executor, which means:

• Bank accounts in the decedent’s name are frozen.
• Real estate cannot be sold, refinanced, or transferred.
• Investment and brokerage accounts remain locked.
• Personal property (vehicles, valuables, etc.) can’t be legally sold or distributed.

This can cause a hardship for the family if those assets are needed to pay bills such as a mortgage.  For many California families, especially those who own real estate, a revocable living trust is the most effective way to avoid these costs and delays in accessing assets.

Why a Revocable Living Trust Is Essential

A revocable living trust is one of the most powerful estate planning tools available. By transferring assets into the trust during your lifetime and maintaining proper designations on life insurance and IRAs, you can:

• Avoid Probate Completely – Trust assets are administered privately, saving time, costs, and stress.  Probate proceedings are public.
• Maintain Control – You act as the trustee during your lifetime and can amend or revoke the trust at any time.
• Provide for Incapacity – Successor trustees can step in seamlessly if you become unable to manage your affairs.
• Protect Beneficiaries – Proper trust design can shield assets from creditors, lawsuits, divorce, and poor financial decisions with special protective provisions.

However, a trust alone isn’t enough. A comprehensive estate plan includes ancillary documents that work together to ensure your wishes are honored and your loved ones are protected.

Key Ancillary Estate Planning Documents

1. Pour-Over Will
   A pour-over will acts as a back-up plan for any assets accidentally left outside your trust. It directs these assets into your trust after death, ensuring your wishes are followed.
2. Power of Attorney
   This document authorizes a trusted person to handle your financial and legal affairs if you become incapacitated, avoiding the need for a costly conservatorship proceeding which can be very costly and time consuming.
3. Advance Health Care Directive & HIPAA Authorization
   An Advance Health Care Directive outlines your medical treatment preferences and designates an agent to make healthcare decisions on your behalf if you are unable to do so. A HIPAA Authorization allows doctors and hospitals to share your medical information with loved ones so they can make informed decisions about your care.
4. Nomination of Guardians for Minor Children
   If you have children under 18, a guardianship nomination ensures that you, not the court, decide who will raise your children if something happens to you.
5. Assignment of Personal Property
   This document transfers ownership of personal belongings (e.g., jewelry, heirlooms, furniture) into your trust, keeping these items out of probate.
6. Assignment of Business Interests
   If you own a business, formally assigning your ownership interest into your trust ensures continuity of operations and avoids legal disputes among heirs or business partners.

The Importance of Keeping Beneficiary Designations Updated

Even the best estate plan can fail if beneficiary designations are missing or outdated. Retirement accounts, life insurance policies, annuities, and transfer-on-death accounts typically pass directly to the named beneficiaries and bypass probate, but only if at least one valid, up-to-date beneficiary is listed.  Having your trust listed as a backup beneficiary on these types of assets can ensure that your assets will avoid probate. Consult with your attorney however to confirm who or what the alternate beneficiary should be in your situation.

Even with the increased probate threshold, many California families, especially homeowners, still face significant exposure to probate costs, delays, and loss of privacy. Establishing a revocable living trust and a full suite of supporting documents ensures that your wishes are honored, your family is protected, and your estate avoids unnecessary expenses.

Together, these documents create a comprehensive estate plan that avoids probate, reduces family conflict, and ensures your intentions are carried out.  Without proper planning, California probate can drain tens of thousands, or even hundreds of thousands of dollars from your estate, delay asset distribution for years, and make your family’s personal matters public.

If you, a friend, or a loved one needs help establishing or updating an estate plan, we’re here to help. Contact our Intake Department at 760-448-2220 or visit us online at www.geigerlawoffice.com/contact.cfm. We proudly serve families across California from our offices in Carlsbad (San Diego County) and Laguna Niguel (Orange County).