Types of Trusts in California: Protecting Family Wealth in 2026

Quick answer: California recognizes many types of trusts, but most families choose from six: revocable living trusts (flexible, avoids probate), irrevocable trusts (stronger creditor protection), special needs trusts (preserves government benefits), spendthrift trusts (guards against a beneficiary’s own poor decisions), charitable trusts (gives and saves taxes), and testamentary trusts (built into a will but still goes through probate). The right one depends on what you own, who you’re providing for, and what you want to protect.

Choosing a trust is one of the more consequential decisions in estate planning, yet most people approach it with only a vague sense that they “probably need one.” Trusts are not interchangeable. A trust that works perfectly for a couple with a home in Ventura County may do nothing for a family with a child who receives SSI. Getting the type wrong can cost more than skipping it altogether. Ridley Law has helped California families sort through these choices since 2010. This guide covers the six types that come up most often, what each one actually does, and when each one makes sense.

Revocable Living Trust

A revocable living trust is the workhorse of California estate planning. You create it now, transfer your assets into it during your lifetime, and you stay in full control as the trustee until you die or become incapacitated. You can change it, add property, remove property, or cancel it entirely. That flexibility is its defining feature.

The main benefit is probate avoidance. California’s probate process for estates above roughly $208,850 (the 2025 threshold under Probate Code § 13100) can drag on for a year or more and cost 4% to 8% of the estate’s gross value in statutory fees. Assets held in a revocable living trust transfer directly to your named beneficiaries without going through that process.

What a revocable trust does not do is protect assets from creditors. Because you keep full control, the law treats those assets as still belonging to you. If you’re sued, your trust assets are reachable. For creditor protection, you need an irrevocable trust.

Learn more about how Ridley Law approaches this at our living trust attorney page.

Irrevocable Trust

An irrevocable trust, as the name signals, cannot be easily changed once signed. You give up control over the assets you transfer in. In exchange, those assets generally fall outside your taxable estate and out of reach of most future creditors.

California does not allow self-settled asset protection trusts. Under Probate Code § 15304, a spendthrift clause in a self-settled trust — one where the person creating the trust also benefits from it — is unenforceable against the settlor’s creditors. So if you’re hoping to shield your own wealth while still drawing income from the same trust, California law will not support that. The protection only works when assets are held for someone else.

Irrevocable trusts are commonly used by professionals with litigation exposure (doctors, contractors, business owners), by families with estates large enough to have estate tax concerns, and by parents who want to transfer wealth to children now rather than at death. They also include specialized structures like irrevocable life insurance trusts (ILITs), which hold life insurance outside your taxable estate.

See our irrevocable trust attorney page for more on how these are structured in California.

Special Needs Trust

A special needs trust (also called a supplemental needs trust) holds money for a person with a disability without disqualifying that person from SSI or Medi-Cal. Both programs have strict resource limits: SSI caps countable resources at $2,000 for an individual. A properly drafted special needs trust is exempt from that calculation.

Starting in 2026, California reinstated a Medi-Cal asset limit of $130,000 for an individual (after the state had temporarily eliminated asset limits in 2024-2025). A special needs trust remains exempt from this limit, making it an important planning tool for families whose loved ones rely on those benefits.

The trust pays for things that supplement — not replace — government benefits: things like education, transportation, recreation, technology, and personal care items not covered by Medi-Cal. If the trust pays for housing directly, SSI can be reduced by roughly $331 per month (the 2026 in-kind support and maintenance reduction). A qualified attorney can structure distributions to minimize that impact.

There are two main types. A third-party special needs trust is funded by someone other than the beneficiary — typically parents or grandparents. It does not require a payback provision to the state. A first-party (self-settled) special needs trust is funded with the beneficiary’s own money, often from a lawsuit settlement or inheritance received directly, and California requires a Medi-Cal payback provision upon the beneficiary’s death.

Ridley Law handles special needs trust planning for Ventura County families.

Spendthrift Trust

A spendthrift trust puts restrictions on how and when a beneficiary can access the money. The beneficiary cannot voluntarily assign their interest to a creditor, and creditors generally cannot attach that interest before distributions are made. The protection is built into the trust language and is authorized under California Probate Code § 15300.

This type of trust is useful when a beneficiary has a history of financial difficulty, addiction, a volatile marriage, or simply isn’t ready to manage a lump sum. The trustee controls when money goes out, and the beneficiary can’t hand it over to a creditor or an aggressive ex-spouse before receiving it.

The protection is real but not absolute. Under Probate Code §§ 15305 and 15306, certain creditors — including those with child support or spousal support judgments, and those with restitution orders from felony convictions — can petition the court to reach trust distributions. Once a distribution is actually made to the beneficiary, it becomes their personal property and is no longer protected.

As noted above, a self-settled spendthrift trust — where you create a trust to protect yourself from your own creditors — does not work in California. The protection applies to your beneficiaries, not to you.

Charitable Trust

A charitable trust lets you give to a cause you care about while also producing income or tax benefits for your family. The most common structures are the charitable remainder trust (CRT) and the charitable lead trust (CLT).

A charitable remainder trust works like this: you transfer appreciated property (real estate, stock, a business interest) into an irrevocable trust. The trust sells the asset without triggering immediate capital gains tax. You or your named beneficiaries receive an income stream for a set period — a fixed amount (CRAT) or a percentage of the current trust value (CRUT). Federal law requires the payout to be at least 5% and no more than 50% of the trust’s value per year. You receive an immediate federal income tax deduction based on the projected present value of the charitable remainder, subject to AGI limits (generally 50% for cash, 30% for appreciated property, with a five-year carryforward). At the end of the term, the remaining assets go to the charity you named.

A charitable lead trust reverses this: the charity receives income first, then the remaining assets pass to your heirs, often with reduced gift or estate tax.

Charitable trusts must be registered with the California Attorney General’s Registry of Charitable Trusts. They make sense for donors with highly appreciated assets, charitable intent, and an interest in generating income or reducing estate exposure.

Testamentary Trust

A testamentary trust is written into your will and comes into existence only after you die and your estate goes through probate. It is not a way to avoid probate. The probate court must validate the will, and the testamentary trust is then funded with whatever assets pass through the estate. The court often continues to supervise the trust throughout its life, requiring periodic accountings from the trustee.

Despite that limitation, testamentary trusts serve a real purpose. They’re commonly used to hold assets for minor children until they reach a specified age, to structure inheritance for a beneficiary who isn’t ready for a lump sum, or to make conditional gifts (for example, leaving money to a grandchild for education). Because the trust is drafted inside the will, there’s no separate document to fund during your lifetime, which some people find simpler.

The trade-off is ongoing court oversight and the cost and delay of probate before the trust even begins. For most California families with a home, a revocable living trust that avoids probate entirely is the more efficient choice. But for smaller estates, or for people who want built-in judicial oversight, a testamentary trust can still be the right tool.

How to Choose the Right Trust

These six types are not mutually exclusive. A family might have a revocable living trust as the foundation, with a special needs sub-trust for a child with a disability, and spendthrift provisions for an adult beneficiary who needs structure. An irrevocable trust might sit alongside the revocable one to hold life insurance.

A few questions worth thinking through before meeting with an attorney:

• Do you own real property in California? If yes, probate avoidance is likely worth the effort of a revocable living trust.
• Does any beneficiary receive SSI, Medi-Cal, or other means-tested benefits? A special needs trust may be essential.
• Are you a professional with liability exposure, or do you have a business interest? An irrevocable structure deserves a look.
• Do you have a beneficiary you’re worried will blow through an inheritance? Spendthrift provisions can help.
• Do you hold highly appreciated property and want to give to charity? A CRT might make sense.
• Are you leaving assets to minor children with no other structure in place? A testamentary trust can hold funds until they’re ready.

Ridley Law has been helping Ventura County families build these plans since 2010. Call (805) 244-5291 or visit our estate planning page to schedule a free consultation.

Frequently Asked Questions

What is the most common type of trust used in California?

The revocable living trust is by far the most common. It lets you avoid California’s lengthy and expensive probate process while keeping full control of your assets during your lifetime. Most California estate plans start here, often with additional provisions or separate trusts added for specific needs.

Does a trust in California avoid probate?

A revocable living trust does avoid probate, as long as your assets are actually transferred into the trust — a step called “funding.” An irrevocable trust also avoids probate. A testamentary trust, however, does not: it is created through your will, which must go through probate before the trust can be funded.

Can a special needs trust affect SSI or Medi-Cal benefits?

A properly drafted special needs trust does not count against the resource limits for SSI or Medi-Cal. The trust must be structured correctly — distributions for housing can still reduce SSI payments, and a first-party trust funded with the beneficiary’s own money requires a Medi-Cal payback provision. An attorney experienced with these rules can set up distributions to minimize benefit reductions.

Does California have a state estate tax in 2026?

No. California does not have a state estate tax. The only estate tax that may apply to California residents is the federal estate tax. As of 2026, the federal exemption is $15 million per individual ($30 million for married couples using portability) after Congress made the higher exemption permanent through the One Big Beautiful Bill Act signed in 2025. Most California families will not owe federal estate tax, though irrevocable trust strategies remain useful for other reasons including creditor protection and lifetime giving.