Trust Administration in California:
A Guide for Successor Trustees

When the Grantor Dies: Your Role as Successor Trustee Begins

If you have been named as a successor trustee of a California revocable living trust, your role begins the moment the grantor dies (or becomes permanently incapacitated). Unlike probate — which requires court supervision — trust administration is a private process you manage yourself, according to the trust document and California law.

This independence is both the advantage and the challenge of trust administration. There is no court telling you what to do next. But there is also no court protecting you from mistakes. Successor trustees who act improperly — failing to notify beneficiaries, failing to file required tax returns, distributing assets prematurely, or favoring some beneficiaries over others — can be personally liable for resulting harm.

The First 60 Days: Critical Early Steps

1. Obtain Certified Copies of the Death Certificate

You will need multiple certified copies (typically 10–15) for financial institutions, real estate transfers, title companies, and government agencies. Order more than you think you need — you can always get more later, but the process takes time.

2. Locate and Review the Trust Document

Find the original trust document and all amendments. Read it carefully — or have a trust attorney review it with you. You need to understand the distribution instructions, any conditions on distributions, trustee powers, and the specific trust terms before taking any action.

3. Send the Required Notice to Beneficiaries (Probate Code § 16061.7)

California Probate Code Section 16061.7 requires the successor trustee to notify all trust beneficiaries and heirs-at-law within 60 days of the grantor's death. The notice must include a copy of the trust and inform recipients of their right to contest the trust. Missing this deadline — or sending an inadequate notice — can create significant legal problems and expose the trustee to liability.

4. Obtain a Taxpayer ID for the Trust

After the grantor's death, the revocable trust becomes irrevocable and needs its own Employer Identification Number (EIN) from the IRS. Apply online at IRS.gov. This EIN is used for the trust's bank accounts and tax filings going forward.

5. Open a Trust Estate Account

Open a separate bank account in the trust's name using the new EIN. All estate income and expenses flow through this account. Do not commingle trust funds with your personal funds.

Taking Inventory and Valuing Trust Assets

You must identify and document all trust assets as of the date of death. For estate tax and stepped-up basis purposes, each asset needs a date-of-death fair market value:

• Real property: Obtain a qualified appraisal from a licensed California appraiser as close to the date of death as possible. This establishes the stepped-up basis.
• Financial accounts: Request date-of-death statements from all financial institutions
• Business interests: May require a business valuation by a qualified appraiser
• Personal property of significant value: Jewelry, art, collectibles — appraise anything of material value

Proper documentation of date-of-death values is critical for both tax purposes (establishing the stepped-up basis) and legal purposes (establishing what the trust owned at death for distribution purposes).

Tax Obligations During Trust Administration

• Decedent's final income tax return (Form 1040 / California 540) — file for the year of death
• Trust fiduciary income tax returns (Form 1041 / California Form 541) — for any income earned by trust assets after death
• Federal estate tax return (Form 706) — if the estate exceeds the exemption, or to elect portability
• Property tax filings — file Prop 19 exclusion claims with the county assessor within required deadlines (typically 1 year)

See our related guide: Estate Income During Probate and Trust Administration

Paying Debts and Claims

Unlike probate, there is no mandatory creditor claim period in trust administration. However, the trustee has a duty to pay valid debts of the decedent from trust assets before distributing to beneficiaries. Distributing assets before paying debts can make the trustee personally liable for unpaid creditor claims. The trustee should identify and pay:

• Medical bills and final expenses
• Mortgages and secured debts
• Federal and state income taxes
• Any other valid obligations

Distributing Trust Assets to Beneficiaries

After debts are paid and tax returns filed (or at least after obtaining reasonable certainty about the tax liabilities), the trustee can distribute assets to beneficiaries according to the trust terms. For real property, this requires recording a new deed transferring title from the trust to the beneficiary (or to a new trust, if directed). Financial accounts are retitled through the institution.

The trustee should obtain a receipt and release from each beneficiary acknowledging the distribution and releasing the trustee from further liability for that distribution.