Setting up a revocable living trust often raises a practical question: who takes on the role of managing the trust assets? The answer might be simpler than you expect.
Path to self-trusteeship
California allows you to serve as the settlor, trustee and beneficiary of your own revocable living trust at the same time. This arrangement is not only permitted but also the most common setup for living trusts across the state. You retain full control over the property in the trust and may use or spend it for your benefit, though you must manage and transact with those assets in your official capacity as the trustee.
Rights and powers in practice
As your own trustee, you hold the following authority over your trust and its assets:
- Managing and investing trust property
- Buying, selling or transferring real estate and other assets
- Amending, modifying or revoking the trust at any time
- Distributing income or principal from the trust to yourself as the beneficiary
As long as the trust remains revocable, you are not required to file a separate tax return for it or obtain a separate tax identification number. You may continue to report trust income on your personal return using your Social Security number.
Key limitations and risks to consider
A self-managed trust can overlook incapacity. If you are the sole trustee and lose the ability to handle your affairs, no one has automatic authority to step in. A court may need to appoint a conservator to manage trust assets on your behalf, which is the kind of costly and public proceeding a trust is designed to avoid.
A trust also only controls the assets formally transferred into it. Signing the trust document is not enough on its own. You must retitle assets, including deeds, bank accounts and investment accounts, into the name of the trust, or those assets may still pass through probate.
Options for a backup plan
Naming a co-trustee or successor trustee is a practical step you can take when creating a revocable living trust. A successor trustee takes over only when you are no longer able to serve or after your death, while a co-trustee shares authority with you from the start.
Consulting with an attorney can help with drafting a trust. Their guidance might clarify your legal options and help you structure a plan that reflects your specific goals.
