Living Trust vs Transfer-on-Death Deed in California: Which Is Better for Avoiding Probate and Protecting Your Home
Living Trust or Transfer-on-Death Deed? A Straight Answer for California Homeowners
Your house is probably the most valuable thing you own. So it's worth figuring out how it gets to your kids without the state taking a cut.
You have two popular options in California: a living trust or a transfer-on-death deed. Both skip probate. They are not interchangeable, and the cheaper one has a few sharp edges that don't show up until it's too late to fix them.
Here's the honest comparison.
Photo by Gene Giromini on Unsplash
First, why anyone bothers
Probate is the court process for transferring assets after someone dies. In California, it typically takes over a year, sometimes longer. Attorney and executor fees are set by statute and calculated on the gross value of the estate, not your equity. A $900,000 house with a $600,000 mortgage gets billed as a $900,000 house. And the whole file is public. Anyone can read what you owned and who got it.
That's the thing both of these tools are designed to avoid.
Worth knowing before you go further: as of April 1, 2025, California lets a primary residence worth up to $750,000 pass through a streamlined court petition instead of full probate. That's a real positive change in the law. But it still means going to court, it only covers a primary residence, and it does nothing if you're alive and incapacitated. So it lowers the stakes for some families without fully answering the question.
The living trust, in plain terms
You create a trust. You move your house and accounts into it. You're the trustee, so nothing about your daily life changes: you can sell, refinance, or rent the place out without asking anyone's permission. You name a successor trustee to take over when you die or if you can't manage things anymore.
That last part is the one people underestimate. A trust handles you getting sick, not just you dying. If you have a stroke tomorrow, your successor trustee can pay your bills and manage your property without anybody petitioning a court for a conservatorship. Conservatorships are slow, public, and expensive, and families hate them.
The catch: a trust only controls what you actually put in it. If you sign the paperwork but never retitle the house, you just have an expensive folder of paper. This is the single most common mistake in estate planning, and it happens constantly.
The TOD deed, in plain terms
California has allowed transfer-on-death deeds since 2016. You fill out a state form naming who gets your house, record it with the county, and then forget about it. You keep full ownership while you're alive. When you die, your beneficiary files paperwork and the house is theirs, no probate.
It costs a fraction of a trust. For some people, it's genuinely the right call.
But the 2022 rewrite of the law added requirements that trip people up:
Two witnesses have to sign, both present at the same time. Notarization alone isn't enough anymore. Miss this and the deed is void, and nobody finds out until you're dead.
You have to record it within 60 days of signing it.
After you die, your beneficiary has to formally notify your heirs. If your kids weren't expecting this, they now find out by certified mail.
The law expires January 1, 2032 unless the Legislature extends it again. Deeds recorded before then stay valid, but it's an odd thing to build a plan around.
And one limitation that surprises almost everyone: if you name more than one beneficiary, they take the property in equal shares as tenants in common. You can't give 60% to one kid and 40% to another. You can't say "sell it and split the proceeds." You get one setting, and it's equal.
Side by side
Living trust or transfer-on-death deed?
| Feature | Living Trust | TOD Deed |
|---|---|---|
| What it covers | Everything you put in it | One property |
| If you become incapacitated | Successor trustee steps in | Nothing. You'll need a power of attorney |
| How it gets signed | Notarized | Notarized plus two witnesses, both present at the same time. Miss it and the deed is void |
| Unequal shares between heirs | Yes, any split you want | Equal shares only |
| If a beneficiary dies before you | Name alternates | Their share splits between the surviving beneficiaries. Their own children get nothing |
| Stays out of public record | Yes, a trust is never recorded | No, the deed is recorded with the county |
| Who your creditors can pursue | Trust assets, through a claims process | The beneficiary personally, up to the property's value |
| Does the law expire | No | Yes, January 1, 2032 unless the Legislature extends it again |
| Upfront cost | Meaningfully more | Meaningfully less |
| Ongoing work | Assets must be retitled | None |
| Control while you're alive | Total | Total |
| Property tax reassessment | None while you're alive. Prop 19 applies at your death | None while you're alive. Prop 19 applies at your death |
| Step-up in basis for heirs | Yes | Yes |
Two rows there deserve a second look.
Neither one protects you from creditors. People assume a trust is a shield. A revocable trust is not. You can still be sued, and your house can still have a lien on it. If someone sold you a trust on the promise of asset protection, that was a promise of a revocable trust doing a job it doesn't do.
Both give your heirs a stepped-up basis. You may read that a TOD deed is better for capital gains. It isn't. Assets in a revocable trust are still part of your estate for tax purposes and get the same treatment. This is a tie.
So which one
Get a trust if you own more than one property, want to divide things unequally, have a blended family, have minor children, own a business, or care about what happens if you get sick before you die. That last one covers almost everybody eventually.
A TOD deed may be enough if your house is essentially your whole estate, you're leaving it to one person or splitting it evenly, your bank accounts already have beneficiaries listed, and you have a durable power of attorney handling the incapacity problem some other way.
Some people use both. A trust handles everything, and a TOD deed sits on a rental property as a second layer of protection. That works, but only if somebody makes sure the two documents don't contradict each other. It also creates unnecessary complication, though, since the trust is a more protective and comprehensive way of transferring the real property.
Four ways this goes wrong
The unfunded trust. You paid for it and never moved the house into it. Your family gets probate anyway, plus a bill for the trust.
Thinking a TOD deed covers everything. It covers the one property described in it. Your bank accounts, your car, and your retirement plan are all separate problems.
The beneficiary who dies first. With a TOD deed and no living beneficiary, the house goes to probate, which is exactly the outcome you were paying to avoid. A trust lets you name alternates.
Stale beneficiaries. You got divorced, remarried, or had another kid. The paperwork still says what it said in 2011. Documents don't update themselves.
Quick answers
Can I do a TOD deed if I still have a mortgage? Yes. Your beneficiary inherits the house and the loan on it.
Can I change my mind? Yes, in either case. For a TOD deed, record a new one. The later deed cancels the earlier one. Don't just tear up your copy.
Can I be my own trustee? Yes, and almost everyone is.
Do I need a lawyer for a TOD deed? Technically no, and this is where people get hurt. It's a short form with a witness requirement that voids the whole thing if you get it wrong, and the mistake surfaces after you're gone. Fifteen minutes with an attorney is cheap insurance.
Come talk to us
We have offices in Studio City and Mission Viejo, and we've had this conversation with a lot of families. Some of them walked out with a trust. Some walked out with a TOD deed and a power of attorney. Which one you need depends on facts about your life, not on which option sounded better in an article.
The worst choice is the one most people make, which is nothing at all.