Probate vs. Trust Administration: When to Recommend Each in California

The Big Picture {#big-picture}

When someone dies in California, their assets need to be transferred to beneficiaries. There are two primary paths: court-supervised probate or private trust administration.

Probate: A formal court proceeding where a judge oversees the collection of assets, payment of debts, and distribution to heirs. Required when assets are titled solely in the decedent's name and exceed California's small estate threshold.

Trust Administration: A private process where the successor trustee manages and distributes assets according to the trust terms. No court involvement required in most cases. Assets must have been properly transferred to the trust during the decedent's lifetime.

Both accomplish the same fundamental goal — getting assets to the people entitled to receive them. The path depends on how assets were titled and what estate planning documents exist.

Understanding both processes is essential for California attorneys. You'll encounter families in both situations, and often a single estate involves elements of both.

Key Differences {#key-differences}

Court Involvement

Probate:

• Court supervises the entire process
• Multiple filings required (petition, inventory, final account)
• Court hearings for key milestones
• Public record — anyone can view filings
• Personal representative must report to the court
• Court approval required for many actions (sales, distributions)

Trust Administration:

• No court involvement in typical cases
• Trustee has authority from trust document
• Private administration between trustee and beneficiaries
• Not public record
• Trustee accountable to beneficiaries, not court
• Court involvement only if disputes arise

Timeline

Probate Timeline:

• Minimum 9-12 months for simple estates
• Typical: 12-18 months
• Complex estates: 24-36+ months
• Statutory waiting periods can't be shortened
• 4-month creditor claim period required

Trust Administration Timeline:

• Can begin immediately upon death
• No statutory waiting periods (though prudent to allow 120 days for creditor claims)
• Typical: 6-12 months
• Simple trusts: 3-6 months
• No court calendar delays

Privacy

Probate:

• Public record from filing to close
• Asset values disclosed
• Beneficiary names disclosed
• Distribution amounts disclosed
• Anyone can access files at courthouse

Trust Administration:

• Completely private
• Only beneficiaries receive accountings
• Asset values not public
• No public record of distributions
• Family privacy maintained

Creditor Protection

Probate:

• Formal creditor claim period (4 months)
• Published notice to creditors
• Late claims generally barred
• Strong creditor cutoff protection

Trust Administration:

• Less formal creditor process
• Probate Code 19000+ procedures available
• 120-day notice period option
• Less clear creditor cutoff

When Probate Is Required {#when-probate-required}

Probate is necessary when:

No Estate Plan Exists

If the decedent died without a will or trust (intestate), probate is required to determine heirs and transfer assets according to California's intestate succession laws.

Assets Not in Trust

Even if a trust exists, assets titled solely in the decedent's name — not the trust's name — may require probate to transfer. This is the "unfunded trust" problem.

Assets Over Small Estate Threshold

California's small estate affidavit threshold is $184,500 (as of 2024). Total probate assets exceeding this amount require formal probate or other court procedures.

Real Property Not Titled in Trust

Real property owned individually (not as joint tenants or in trust) generally requires probate, though AB 2016 creates an exception for qualifying primary residences up to $750,000 (effective April 2025).

Pour-Over Will Assets

A pour-over will directs probate assets into an existing trust. The will must go through probate before assets can be poured into the trust.

Disputed Estates

Will contests, beneficiary disputes, and creditor litigation typically require court involvement even if a trust exists.

When Probate Can Be Avoided {#when-probate-avoided}

Fully Funded Revocable Living Trust

Assets titled in the name of the trust pass according to trust terms without probate. The key is "fully funded" — assets must have been properly transferred during lifetime.

Properly funded means:

• Real property deeded to trust
• Bank accounts in trust name or with trust as POD beneficiary
• Investment accounts in trust name
• Business interests assigned to trust

Small Estates Under Threshold

Estates with total probate assets under $184,500 can use simplified procedures:

• Small estate affidavit (personal property)
• Small estate set-aside (for surviving spouse)
• No formal probate required

Beneficiary Designations

Assets with named beneficiaries pass directly, outside probate:

• Life insurance policies
• Retirement accounts (401(k), IRA)
• Annuities
• Bank accounts with POD (payable on death)
• Brokerage accounts with TOD (transfer on death)

Joint Tenancy Property

Property owned in joint tenancy with right of survivorship passes automatically to the surviving joint tenant(s). Simple affidavit process — no probate.

Community Property with Right of Survivorship

Real property held as community property with right of survivorship transfers automatically to the surviving spouse.

AB 2016 Simplified Transfers

For deaths on or after April 1, 2025, qualifying primary residences up to $750,000 can transfer to a surviving spouse or domestic partner without full probate.

Trust Administration Process {#trust-administration-process}

For attorneys handling trust administration, here's the typical process:

Initial Steps

Immediately upon death:

• Locate and review trust document
• Identify successor trustee
• Obtain certified death certificates (10-15 copies)
• Secure trust assets
• Notify key beneficiaries

Within first 60 days:

• Send notice to beneficiaries (Probate Code 16061.7)
• Identify all trust assets
• Determine if any assets require probate
• Open trust bank account
• Obtain EIN for the trust

Ongoing Administration

Asset management:

• Collect and secure all assets
• Obtain date-of-death values
• Manage real property
• Collect debts owed to trust

Creditor handling:

• Consider 120-day notice to creditors (optional but recommended)
• Pay valid debts
• Reject invalid claims

Tax compliance:

• File final individual income tax return
• File trust income tax returns
• Handle estate tax return if required (Form 706)

Distribution and Termination

Prepare for distribution:

• Prepare trust accounting
• Send accounting to beneficiaries
• Allow review period
• Address any objections

Final distribution:

• Transfer assets per trust terms
• Obtain receipts from beneficiaries
• Prepare termination documents
• Close trust accounts

Cost Comparison {#cost-comparison}

Probate Costs

Attorney fees: Statutory fees under Probate Code 10810 | Estate Value | Fee | |--------------|-----| | $500,000 | $13,000 | | $1,000,000 | $23,000 | | $2,000,000 | $33,000 |

Plus:

• Court filing fees ($400-600)
• Probate referee fees (0.1% of appraised assets)
• Publication costs ($200-500)
• Bond premiums (if required)

Executor compensation: Same statutory scale as attorney fees (often waived by family members)

Trust Administration Costs

Attorney fees: Negotiated hourly or flat fee

• Typical hourly: $350-500/hour
• Typical flat fee: $3,000-15,000
• No statutory requirement

Other costs:

• Trust accounting software/preparation
• Real property transfer fees
• Tax preparation
• No court fees, referee fees, or publication costs

Real-World Comparison

$500,000 estate:

• Probate: ~$15,000-20,000 total
• Trust administration: ~$5,000-10,000 total

$1,000,000 estate:

• Probate: ~$28,000-35,000 total
• Trust administration: ~$7,000-15,000 total

The trust administration savings are significant, which is why estate planners recommend trusts for California families with real property.

Hybrid Situations {#hybrid-situations}

Many estates involve both probate and trust administration:

Unfunded or Partially Funded Trusts

Common scenario: Trust exists, but:

• House never transferred to trust
• Bank accounts remain in individual name
• Investment accounts overlooked

Solution: Probate for assets outside trust, trust administration for assets inside trust. Pour-over will directs probate assets into trust.

Small Probate Assets

Scenario: Trust holds house and major accounts, but small bank account ($10,000) remained in individual name.

Solution: Small estate affidavit for the bank account — no formal probate needed for minor assets under threshold.

Vehicles

Common issue: Cars typically not transferred to trust (DMV complications, insurance concerns).

Solution: If car value plus other non-trust assets under $184,500, small estate affidavit handles it. Otherwise, it's part of probate.

Counseling Clients {#counseling-clients}

Estate Planning Clients

When they ask "Do I need a trust?"

Recommend trust when:

• Own California real property
• Total assets over $184,500
• Privacy is important
• Have property in multiple states
• Want to avoid delays
• Concerned about incapacity planning
• Have complex distribution wishes

Will may be sufficient when:

• All assets have beneficiary designations
• Assets under threshold
• No real property
• Simple distribution wishes
• Cost is primary concern

Families After Death

Initial consultation questions:

• Did decedent have a trust?
• Was the trust funded (are assets titled in trust name)?
• What assets exist and how are they titled?
• Are there assets with beneficiary designations?
• What is the total value?

Then recommend:

• Trust administration if fully funded trust
• Probate if no trust or significant unfunded assets
• Small estate procedures if under threshold
• Combination approach when appropriate

Practice Opportunities {#practice-opportunities}

Understanding both processes creates multiple practice opportunities:

Cross-Referrals

Estate planning to probate: Estate planning attorneys often refer probate matters. Build relationships with estate planners in your area.

Probate to estate planning: Every probate client learns the costs and delays of probate. Offer estate planning services to family members who want to avoid probate themselves.

Trust Review Services

Many families have old, unfunded trusts. Offer trust review and funding services — helping clients properly title assets in their trust name before death.

Trust Administration Practice

Handling trust administration alongside probate doubles your addressable market. Similar skills, similar clients, lower court involvement.

Mediation and Disputes

Trust and probate disputes — beneficiary conflicts, trustee removal, will contests — create litigation opportunities.

The attorney who understands both probate and trust administration can serve California families through the full spectrum of estate settlement needs. This makes you more valuable to clients and generates more referrals.