My wife and I have a checking account in a bank in Anaheim, California, that we use to pay our monthly bills. We only keep a few thousand dollars in this account. As a trust attorney in California, do you recommend that we transfer our checking account into our living trust?

Because you keep only a few thousand dollars in this checking account at your bank in Anaheim, California, it is not absolutely necessary to transfer the checking account into your trust in order to avoid the probate process. However, as you will see in a few minutes, that's not the end of the story.


Why isn’t it necessary? It is clear that a revocable living trust needs to be properly funded in order to avoid the probate process. The vast majority of individuals and couples that establish a revocable living trust in our Orange County estate planning firm do so to avoid the probate process. There is no limit to how much a person can have in assets inside a trust and avoid probate, but there is a limit to how much you can have outside of your trust and still avoid the probate process. That limit is $150,000 of non-real estate assets, such as the money you have in your checking account. In California, if you have real estate outside your trust, you cannot have more than $50,000 of fair market value, or it will go through the probate process.


Most individuals, like you, have far less than $150,000 in their checking accounts. Therefore, it is not absolutely necessary for the checking account to be transferred into the trust. As long as the total cumulative of assets outside the trust is less than $150,000, including the checking account, your estate will not go through the probate process.


The better question – "Should you put your checking account into the trust anyway?" The answer to this question is "yes." Although you can avoid probate by having less than $150,000 of assets outside of your trust, it is easier and faster for the successor trustee to have access to your checking account upon your death if it is in your trust. If your checking account is in your name alone outside the trust, and you pass away, the successor trustee must wait 40 days and complete a 13100 Declaration and have his or her signature notarized. If the checking account is in your trust, the successor trustee will have access generally once the successor trustee has a copy of your death certificate.


One of the reasons clients hesitate about putting their checking account into a trust is because they don't want to get new checks printed with the word "trustee" or "family trust" on the face of their checks. Our recommendation is to change the signature card at the financial institution to reflect that the account is properly in your trust, rather than having "trustee" or "family trust" appear on the face of the checks.


We hope this helps. If we can be of further assistance, please do not hesitate to contact one of our Orange County estate planning lawyers at (714) 459-5481. Our California estate planning law firm is always here to assist you.

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm