Two common ways to ensure selected individuals/entities will get your property are to make a will or a living trust. For certain property, however, you can simply include beneficiary designations to indicate who you want to inherit the property. Examples of property that can have beneficiary designations include, but are not limited to, automobiles that you own, life insurance policies, bank accounts, and retirement accounts.

Both a will and living trust indicate who your property should be given to when you pass away. The main difference between the two is the process by which the property is distributed. In order to distribute the property to those indicated in a will, one must go through a long, expensive and public court process known as probate. In probate, the validity of the will is verified, all assets and debts of the decedent are inventoried, the decedent’s debts are paid and the decedent’s property is distributed according to the terms of the will.

With a living trust, a similar process known as “trust administration” occurs where various notifications are made, assets/debts are inventoried, decedent’s debts are paid and the property is distributed according to the terms of the trust. However, the trust administration process is typically much faster, less expensive and quicker than probate.

You should also have a will established at the same time you make your living trust for a variety of reasons. For example, you may purchase some property later (after-acquired property) and forget to put it into the trust. Although you may have to go through the probate process to distribute the after-acquired property (in California this will depend on the value of the property that has to be probated), at least your property will be distributed according to your wishes. Moreover, you also need a will if you if you have minor children and want to appoint someone (a guardian) to take care of your children if you pass away.
 
Furthermore, a will can be drafted in such a way that it can become a testamentary trust, which will include all of the terms of your living trust, in case there are issues with your living trust that cause it to be invalid. This will ensure your property will be distributed according to your wishes in the living trust even if, due to some legal or other error, there are issues with distributing property via the living trust.If you have a living trust, you only need to make a simple will called a pour-over will. Such a will indicates that all of your property not otherwise designated to go to any specific beneficiary will go to the trust, which ensures it will be distributed according to your instructions in the trust.

A revocable living trust can be modified by the person who created the trust (called the grantor or settlor). They can change any aspect of the trust, including the beneficiaries and the distribution instructions. They can even revoke the trust, so that all terms of the trust are removed and the property is returned to the grantor/settlor.
 
An irrevocable living trust is one which, absent very few exceptions, cannot be modified or revoked. Typically, the grantor/settlor is not the trustee of an irrevocable trust so they have no general control over the property.

No. Your revocable living trust is effective in California without being formally recorded. This is one benefit of a revocable living trust – you can distribute your property privately, without any non-involved parties being notified, involved or otherwise aware of the process. That being said, if you want to record your trust, you can.

No. If you place your property in a revocable living trust, you are still the rightful owner of the property, you can control the property and you can make changes to the trust. One way to protect your property from creditors is with an irrevocable trust. Such a trust cannot be altered, although there are exceptions. Typically, you are not the trustee so you have no general control over the property.  Therefore, creditors cannot, in general, access the property in the trust. One example of an exception to creditors not being able to access property in an irrevocable trust is if you place your property in the trust with the intent to defraud your creditors, then creditors may go to court to have any property transfers to the trust reversed so they can access the property.

Estate taxes are taxes on the transfer of property at death. You (through your estate) will only have to pay federal estate taxes if the total value of all of your property exceeds the exemption limit set by law. Although some states have state estate taxes, California has no such tax.

The amount you pay in real property (land and any immovable property on land, including a house) taxes is based initially on the value of the property when it is purchased (an assessment is done on the property). Property is subsequently reassessed whenever there is a change in ownership of the property. Technically, there is a change in ownership of the property when you place your property into the trust as you are changing the owner of the property from you as an individual to you as a trustee. For example, a single/unmarried person who owns one or more houses and is the sole person on title will transfer it to themselves as trustee of their trust. A married couple who purchased one or more houses and are the sole individuals on title will transfer the property to themselves as trustees of their trust. Such transfers are not considered a change in ownership in California, so the amount of property taxes will not be increased as a result of the transfer of the property into the trust.

Although some states have inheritance taxes, California does not. However, federal estate tax may be owed by the estate you inherited the property from, depending on the value of all property in the estate.

Although California is a community property state (spouses own half of all property acquired during marriage), property that is inherited is considered separate property. As long as your child does not change the nature of that property, by commingling it or otherwise converting it to community property, it remains separate property and their spouse will generally have no interest in the property.
 
One example of commingling occurs when the property is mixed with property owned jointly by your child and their spouse (e.g., your child inherited money and places it in the joint bank account owned by your child and their spouse). Upon divorce, if this separate property cannot be identified and separated from the community property (in a process known as tracing), some or all of it may be considered community property. Moreover, your child can convert their separate property to community property (in a process known as transmutation). For example, if they inherit property, they can make a written agreement that the property is community property. For real property ((land and any immovable property on land, including a house), your child can simply transmute the property with specific language in a grant deed when transferring it to themselves and their spouse.
 
However, you can leave your property to your children in trust, with a third party trustee in charge. In this way, your child will not own the property and their spouse will have no access to it. Of course, when the trustee distributes a portion of the property to your child, you have the same situation as when the property is not held in trust – it remains separate property unless your child takes action that makes it community property.

You will need to identify your beneficiaries – those individuals who will obtain your property when you pass away. In most cases these are your family members, but they can be friends, charities or any other person or entity you select.
 
You will also need to identify what percentage of your property each beneficiary will receive, or if a specific person or entity will receive a specific property (e.g., a specific sum of money, a specific house, etc.).
 
You will also need to identify what property you wish to put into the trust. Some attorneys list all of this property in pages of the trust known as Schedules (e.g., Schedule A, etc.), so they will ask you for information that will specifically identify the property (e.g., account numbers, etc.). However, just because the property is listed on a Schedule in the trust does not mean it is owned by the trust. You must take action to ensure property will be owned by the trust. The attorney will typically prepare the Grant Deeds to transfer your house and any land you own into the trust, and will advise you how to transfer other property into the trust if they do not do it themselves.
 
Towards that end, the attorney will also ask for your Grant Deeds for any real property (land and any immovable property on land, including a house) you want to include in the trust. Your Grant Deed is the document that transferred ownership of your house from the former owner to you, and was recorded in your County Recorder’s Office. The attorney will need this so they can prepare a Grant Deed to transfer your real property to your trust.