You Have a Trust. So, Why Would Your Kids End Up in Probate?

You did the responsible thing. You worked with an attorney, set up a trust, and crossed "estate plan" off your to-do list. You probably felt a wave of relief walking out of that office.

But here's the thing: Having a trust and having a trust that works are two different things. And the gap between them is where a lot of families get tripped up.

We see this more often than you'd think. Someone comes into our office confident that their estate is buttoned up, and when we start looking under the hood, we find a few loose bolts that could send their kids straight into probate court. That's the exact outcome the trust was supposed to prevent.

So, what goes wrong?

The Trust Is There, but the Assets Aren't in It

This is a big one. A trust only controls the assets that have been retitled into it. If you created your trust 10 years ago and have since bought a new house, opened a brokerage account, or refinanced a property, those assets might still be in your personal name.

Think of your trust like a vault. You can build the most secure vault in the world, but if you leave your valuables sitting on the kitchen counter, the vault isn't doing much for you.

Every account and every piece of property that isn't properly titled in the name of your trust could end up going through probate. And if you’re in California, probate is not quick or cheap. The process typically takes nine to 18 months, and during that time, those assets are essentially frozen. Your kids can't access the house, the accounts, or much of anything until the court is finished.

Then there's the cost. California's probate fees are calculated on the gross value of your assets, not the net equity. That means if you own a home worth $800,000 but still owe $300,000 on the mortgage, the fees are based on the full $800,000. Both the attorney and the executor receive the same statutory fee, so on a million-dollar estate, combined fees alone come to about $46,000. That's before court filing fees, appraisal costs, and everything else.

If it's been a while since you set up your trust, it's worth checking that everything you own is actually inside of it.

Outdated Beneficiaries Can Override Your Trust

Here's something a lot of people don't realize: Beneficiary designations on accounts like life insurance policies, 401(k)s, and IRAs override whatever your trust says.

Let’s put it this way. Let's say that your trust spells out exactly how your money should be divided between your three kids. But your old 401(k) still lists your ex-spouse as the beneficiary. Guess who gets that money? It's not your kids.

Beneficiary designations are their own legal instruction. They don't care what your trust document says. And if you haven't reviewed yours in a few years — especially after a major life change like a divorce, remarriage, or birth of a grandchild — there could be a mismatch sitting in your accounts right now.

The Hidden Trap: Naming Your Trust as an IRA Beneficiary

This one is a little more nuanced, but it matters. Some people name their trust as the beneficiary of an IRA, thinking it gives them more control over how the money gets distributed. And in some situations, that makes sense.

But it can also create a real tax headache for your heirs. When a trust inherits an IRA, the required withdrawal rules can get complicated fast. Depending on how the trust is structured, the money could be taxed at the trust's income tax rate, which hits the highest bracket much sooner than an individual's rate would.

In 2026, a trust reaches the top 37% federal tax bracket at just $16,250 in income. An individual doesn't hit that same rate until over $640,000. That's a massive difference, and it can take a real bite out of what you intended to leave behind.

This doesn't mean naming a trust as a beneficiary is always wrong. There are situations where it's the right move. But it's the kind of decision that needs to be looked at carefully with both your estate attorney and your financial advisor, not set and forgotten.

Your Trust Needs a Checkup, Not Just a Filing Cabinet

A trust isn't a one-and-done document. Life changes, tax laws shift, and accounts get opened and closed. The financial picture your trust was built around five or 10 years ago might look very different today, and if your plan hasn't kept pace, the gaps could cost your family real time and money.

A financial advisor can help you spot those gaps. We work alongside estate attorneys to make sure your overall financial plan — your investments, your beneficiary designations, your retirement accounts, your trust — works the way it should.

If you're an Evermont client, this is the kind of thing we're already keeping an eye on for you. But if your adult children are building their own financial lives — buying homes, starting families, opening retirement accounts — they may not have the same safety net in place. Encouraging them to get their own plan in order is one of the most valuable things you can do for them. If they'd like a second opinion or want to start building a plan of their own, we'd welcome that conversation. They can give us a call at (909) 296-7977 or schedule a consultation at evermont.com.

Keep building your future, and your family's.

This material was written in collaboration with artificial intelligence (Claude) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.