Personal Finance (Not Investing) • suggestions on living trust in California with (maybe) dynastic terms

As you point out, if the trustees are outside California, the trusts will avoid (or at least defer) the California income tax.

If you don't have suitable individuals outside California (and not in a state with a high state income tax that taxes trusts based on the location of the trustees or where the trust is administered), Vanguard or Schwab will serve for about 0.5% a year. You can give the children effective control by giving them the power to remove and replace the trustee, provided the replacement isn't a close relative or subordinate employee.

The OP lives in California and is talking about establishing a Nevada Dynasty trust for beneficiaries who also live in California, that can avoid California state tax, by using a Nevada's trustee. My understanding is this means that neither he nor future beneficiaries can control the investments, because they would have to turn over decisions about investments to an independent fiduciary. I don’t see how he could force them to invest 100% of the trust assets in a particular total stock market index fund. if they are an independent fiduciary, they would have to be allowed to control the investments themselves. If instead he gave the future beneficiaries the power to control the investments that would make them fiduciaries living in California, which would expose the trust to California state tax. At least that is my understanding, please correct me if I’m wrong. I’m in a similar situation myself, pondering trust setups, and trying to figure this out. Basically, I would like to have a trust that can avoid California state tax on retained income, but I wouldn’t want to have to give control of investments to a professional. But if it was possible to force them to do something simple like invest only in a total stock market index fund, that might look better. Is it possible to find an independent Nevada fiduciary, or Vanguard acting as a trust, who would agree to follow the settlers instructions to only invest 100% in one particular index fund?

Statistics: Posted by fundtalker123 — Fri May 08, 2026 11:53 am — Replies 11 — Views 1098

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