CA Trusts Guide: Kids Estate Planning

Quick answer: A trust holds your child’s inheritance and releases it at ages you choose, managed by a trustee you pick. Without a trust, California courts may require a formal guardianship of the estate to manage any inheritance over $5,000 until your child turns 18, then hand over the full amount all at once. A trust skips that process entirely and lets you set your own terms.

Most parents think of a will when they picture estate planning for their kids. A will matters, but it does not automatically protect a child’s money. Under California law, a minor cannot legally own property. If your child inherits more than $5,000 with no trust in place, the probate court typically has to get involved before anyone can manage or spend that money on their behalf. That means court filings, a court-appointed guardian of the estate, annual accountings, and court approval for even routine expenses.

A trust sidesteps all of that. The assets move into the trust, your named trustee manages them, and the money goes to your child when and how you decide. You might set distributions at 25 for a lump sum, or split them at 22, 28, and 35. The trust can also continue paying for education, health, and living costs before then. You stay in control of those decisions now, not a judge later.

Eric D. Ridley has been helping Ventura County families set up trusts since 2010. The questions he hears most often are the same ones you probably have: Do I really need a trust? What kind? How do I protect a child with a disability? This post walks through the answers.

Why a Trust Beats a Will Alone for Minor Children

A will names guardians and says who gets what, but it cannot hold money for a child in a flexible, court-free way. Once a will is probated, assets pass to the beneficiaries named in it. If that beneficiary is a minor, the court steps in.

California Probate Code procedures require a formal guardianship of the estate for a minor who inherits more than $5,000 with no trust or custodianship arrangement in place. The guardian must file an inventory, submit annual accountings, and get court approval before spending significant amounts. At 18, the court closes the guardianship and hands over whatever remains, regardless of whether the child is ready to manage a large sum.

A revocable living trust avoids that entirely. You create it during your lifetime, transfer your assets into it, and name a successor trustee who steps in if you die or become incapacitated. The trust document tells the trustee exactly how to handle your child’s share: which expenses to cover, at what ages to make distributions, and how to invest in the meantime. No court involvement required.

How a Children’s Trust Works in Practice

When you set up a trust for your child’s benefit, you answer a few basic questions in the trust document:

Who manages the money?

You name a trustee, which can be a family member you trust with finances, a close friend, or a professional trust company. The trustee has a legal duty to act in your child’s best interest and follow the terms you set. If the trustee you name is unavailable, your document names a successor so there is no gap.

What can the money be spent on before the final distribution?

Most parents authorize the trustee to use trust funds for health, education, maintenance, and support. That covers tuition, medical bills, housing costs, and day-to-day needs. You can be as broad or specific as you want.

When does your child receive outright distributions?

This is entirely up to you. A common approach is staggered distributions, such as one-third at 25, one-third at 30, and the remainder at 35. That way, if your child makes a costly mistake with the first distribution, two-thirds of the inheritance is still protected. You can also tie a distribution to finishing a degree or reaching some other milestone.

What if something happens to your child before the trust ends?

You name a contingent beneficiary, often other children, a charity, or another family member, so the assets go where you intend rather than back into probate.

The Special Needs Trust: Protecting a Child With a Disability

If your child receives SSI (Supplemental Security Income) or Medi-Cal, a standard inheritance could disqualify them from those benefits. SSI has a $2,000 asset limit for an individual. A direct inheritance that pushes assets above that threshold can suspend benefits until the money is spent down.

A special needs trust solves this. Properly drafted, a special needs trust is exempt from the asset calculations used for SSI and Medi-Cal. The trust can pay for things those programs do not cover, such as a computer, therapy not covered by insurance, recreation, transportation, and supplemental care, without counting as a resource that disqualifies your child from benefits.

This matters especially in California in 2026. Medi-Cal re-imposed asset limits on January 1, 2026, setting a $130,000 threshold. A direct inheritance that exceeds that amount could affect Medi-Cal eligibility. Assets held in a properly structured special needs trust are excluded from that calculation.

The trustee of a special needs trust has to follow specific rules about what the trust can and cannot pay for, since certain direct payments (cash, food in some circumstances) could still affect SSI. An attorney familiar with California public benefits law sets those parameters correctly in the trust document.

Types of Trusts Used for Children in California

Most families use one or more of these:

Revocable Living Trust with a Children’s Sub-Trust

This is the most common approach. You create a revocable living trust that holds your assets during your lifetime. At your death, the share going to a minor stays in a sub-trust, managed by the successor trustee under the terms you set. You can change the trust at any time while you are alive. It avoids probate for all assets titled in the trust.

Testamentary Trust

Created through your will, this trust only comes into existence after you die and your will is probated. It gives you the same distribution controls as a living trust but still goes through probate first. That means court costs, a public record, and a delay before the trustee has authority to act. It is better than no trust, but a revocable living trust is more efficient.

Special Needs Trust

Used specifically when a beneficiary has a disability and receives means-tested government benefits. Can be set up as a standalone trust or as a sub-trust inside a larger living trust. See Ridley Law’s special needs trust page for more detail.

UTMA Custodianship (Not a Trust, but Worth Knowing)

A Uniform Transfers to Minors Act account lets an adult hold assets for a minor without a formal trust. The custodian manages the account until the child turns 18 or 25, depending on what you specify. It is simpler and cheaper than a trust but offers fewer controls. The child gets everything at the cutoff age with no staggering option, and it does not protect a special-needs beneficiary.

Setting Up a Trust: What the Process Looks Like

The process is straightforward when you work with an attorney. You start by deciding your goals: who benefits, at what ages, in what amounts, and who serves as trustee. The attorney drafts the trust document based on those decisions. Once you sign it before a notary, you fund the trust by retitling assets into the trust’s name. Real estate, bank accounts, and investment accounts are typical funding items. Life insurance and retirement accounts usually name the trust or a sub-trust as beneficiary rather than being retitled.

After funding, the trust operates during your lifetime just as your accounts did before. You remain trustee of your own revocable living trust. Nothing changes day-to-day. The trust only becomes active for your children’s benefit if you become incapacitated or die.

See Ridley Law’s estate planning page for an overview of how trusts fit into a complete estate plan.

Frequently Asked Questions

What happens if I die without a trust and my minor child inherits money in California?

If the inheritance is over $5,000, the probate court typically requires a guardianship of the estate. A guardian is appointed to manage the funds, files annual accountings with the court, and must get court approval for major expenses. The process ends when your child turns 18, at which point the remaining balance is turned over in full. A trust avoids this entirely.

Can a trust keep my child from receiving the money all at once when they turn 18?

Yes. That is one of the main reasons to use a trust rather than a UTMA account or a simple inheritance through a will. You set the distribution ages and amounts in the trust document. The trustee follows those instructions regardless of your child’s age at the time of your death.

Will a special needs trust affect my child’s SSI or Medi-Cal?

A properly drafted special needs trust does not count as a resource for SSI or Medi-Cal purposes. Assets inside the trust are excluded from the asset calculation used to determine eligibility. The trustee must follow the rules for what the trust can pay for directly, since some payments can still affect SSI benefit amounts. Getting the drafting right matters, which is why this type of trust requires an attorney who knows California public benefits law.

How much does it cost to set up a trust in California?

Costs vary based on complexity. A revocable living trust with a children’s sub-trust is a fixed-fee service at Ridley Law. The upfront cost is typically far less than one year of guardianship of the estate proceedings, which involve court filing fees, attorney fees, and the time involved in annual accountings. Call (805) 244-5291 to discuss what your situation requires.

If you have children, a trust is worth a serious look regardless of the size of your estate. The goal is not to avoid taxes on a large fortune. The goal is to keep a judge from deciding how your child’s money is spent, and to make sure the money is still there, managed well, when your child is ready for it. Call Ridley Law at (805) 244-5291 or schedule a free consultation online to talk through your options.