California's New Trust Law: How Virtual Representation Streamlines Trust Property Decisions.

If you are a trustee managing a family trust that holds real estate in California, a new state law has quietly made your job significantly easier. Assembly Bill 565, which took effect January 1, 2026, introduces sweeping changes to how trust administration works — and it has direct implications for anyone selling inherited property or navigating trust-owned real estate in Los Angeles.

As an AI-forward real estate strategist with 25+ years of experience serving trustees, heirs, and families across the Westside and greater Los Angeles, I have been watching AB 565 closely. Here is what it means, why it matters for trust property sales, and how families can take advantage of this important legal shift.

What AB 565 Does: Virtual Representation for Trusts

Before AB 565, when a trustee needed court approval for a trust action — including certain trust modifications or property-related decisions involving minor, unborn, or unknown beneficiaries — the trustee was often required to appoint a guardian ad litem to represent those beneficiaries in court. This added time, expense, and procedural complexity to what should have been a straightforward administrative process.

AB 565 fundamentally changed that. The law codifies and expands the concept of virtual representation in California Probate Code Section 15804, allowing a trustee or other fiduciary to represent and bind minor, unborn, and unknown beneficiaries in court-approved trust actions without the need for separate guardian ad litem appointments.

In plain language: when a trustee needs court approval for a decision that affects the trust, and some of the beneficiaries are minors, not yet born, or cannot be identified, the trustee can now represent their interests directly — as long as no conflict of interest exists. This saves months of procedural delays and thousands of dollars in legal fees.

Why This Matters for Trust Property Sales

Here in Los Angeles, the family home is often the largest and most significant asset held in a trust. When a trust needs to sell real estate, a few common situations arise where virtual representation becomes especially valuable:

• The family trust includes minor children or grandchildren as remainder beneficiaries. If the trust needs court authorization to sell property and distribute proceeds, the trustee previously had to go through the guardian ad litem process for each minor beneficiary. Under AB 565, the trustee can represent them directly — streamlining the timeline and reducing costs.
• The trust names future beneficiaries who are not yet born. This is common in dynasty trusts or long-term estate plans. Virtual representation eliminates the need to guess who might qualify as a guardian for an unborn beneficiary.
• Some beneficiaries cannot be located or their identity is unknown. AB 565 gives the trustee clearer authority to act on their behalf in court proceedings, which is critical when time-sensitive property decisions need to be made.
• Trust modifications are needed to facilitate a sale — for example, if changing market conditions or family circumstances require the trust to be restructured to sell property efficiently. Virtual representation streamlines the court approval process for these modifications.

For trustees managing real estate on the Westside — from a mid-century family home in Brentwood to a trust-owned condominium in Santa Monica or a legacy property in View Park — this law removes a significant procedural hurdle that previously slowed down estate administration.

One Critical Exception: Conflict of Interest

Virtual representation is not available in every situation. The law explicitly prohibits it when a conflict of interest exists between the trustee and the beneficiary they seek to represent.

Here is where trustees and their advisors must be careful. If the trustee is also a beneficiary — which is common in family trusts — and the trustee's personal interest in the property disposition differs from the minor or unborn beneficiary's interest, a conflict may exist. For example, if the trustee wants to sell a property quickly to access their share of the proceeds, but a minor beneficiary would benefit from holding the property for long-term appreciation, the trustee cannot use virtual representation to push the sale through without independent representation for the minor.

This is not a reason to avoid virtual representation. It is a reason to work with professionals — a trust attorney and a real estate strategist — who can evaluate whether a conflict exists and structure the process accordingly.

AB 565 in Context: California's Continuing Evolution of Trust and Estate Law

AB 565 follows a broader trend in California toward making trust and estate administration faster, more accessible, and less costly for families. It joins other recent changes — including AB 2016's increased probate threshold and expanded electronic filing options — in modernizing a system that has historically been slow and paper-heavy.

Together, these changes create a legal environment where families managing inherited or trust-owned property have more flexibility than they did just a few years ago. But flexibility requires knowledge. The families and trustees who benefit most are the ones who know about these tools and bring in experienced advisors to use them strategically.

What Trustees Should Do Right Now

If you are a trustee managing a trust that holds real estate in California, here are three steps I recommend:

1. Review your trust document with a qualified trust attorney to understand whether AB 565's virtual representation provisions apply to your situation and whether any modifications to the trust are advisable.
2. Assess your real estate strategy early. The property held in trust is not just a legal asset — it is a financial and emotional one. Whether you plan to sell, hold, or distribute the property, the decision should be grounded in market realities, property condition, beneficiary needs, and tax implications. I help trustees evaluate all of these factors before they commit to a course of action.
3. Coordinate your team. Trust property sales involve trust attorneys, real estate strategists, CPAs, appraisers, and sometimes mediators. The best outcomes happen when these professionals communicate early and work together under a clear strategy. As the real estate strategist, I serve as the coordination point — making sure the property component stays aligned with the legal and financial dimensions.

How I Help Trustees and Families Navigate Trust Property Sales

When a trustee calls me about a trust property, they are often juggling multiple responsibilities: managing family expectations, coordinating with attorneys, maintaining the property, and making decisions that affect beneficiaries with different needs and timelines. It can feel overwhelming, especially when the property is the family home and emotions are high.

My role is to bring clarity to that complexity. I help trustees understand the property's current market value, condition, and positioning. I evaluate whether selling now, waiting, renting, or distributing the property makes the most strategic sense. I coordinate with the trust attorney to ensure the sale process aligns with the trust's legal requirements and any court procedures that may apply. And I manage the marketing, negotiations, and transaction logistics so the trustee can focus on their fiduciary responsibilities.

With over 1,100 homes sold, deep experience in trust and probate real estate across Southern California, and AI-forward analysis that helps compare scenarios and clarify options, I bring a level of strategic thinking that goes far beyond what a traditional listing agent provides.

As I often say: AI organizes the information. I read the room, protect the people, and lead the strategy.

AB 565 is a meaningful step forward for California trust administration. But even the best legal framework still needs a human strategist who understands the market, the family dynamics, and what is at stake. That is where I come in.