When someone who created a revocable living trust — the trustor or settlor — dies in California, their successor trustee steps into one of the most important fiduciary roles in estate law. Trust administration is the process by which the successor trustee gathers the trust’s assets, pays debts and taxes, and distributes what remains to the beneficiaries according to the trust’s terms.
For many families, this is unfamiliar territory. This guide walks through what California trust administration looks like from start to finish — what the trustee must do, in what order, and on what timeline.
Step 1: Confirm Your Authority as Successor Trustee
The successor trustee’s authority begins automatically upon the trustor’s death (or incapacity, for a living trust). The trustee should obtain multiple certified copies of the death certificate — typically 10 or more — and prepare a Certification of Trust under California Probate Code § 18100.5, which can be presented to banks, title companies, and other institutions to establish authority without disclosing the full trust document.
Step 2: Send Statutory Notices (Within 60 Days)
California Probate Code § 16061.7 requires the trustee to notify all beneficiaries named in the trust and all heirs of the deceased within 60 days of the trustor’s death. The notice must include a copy of the trust (or the relevant portions), and informs recipients of their right to contest the trust within 120 days. This deadline is strictly enforced — failure to give proper notice can expose the trustee to liability.
Step 3: Inventory and Value All Trust Assets
The trustee must identify and take control of all assets held in the trust: real estate, bank and investment accounts, business interests, personal property, and any other assets. For each asset, the trustee establishes the fair market value as of the date of death — this “date of death value” is critical for tax purposes and for calculating capital gains on future sales.
Real estate must be appraised. Investment accounts receive a step-up in basis to date-of-death value. Business interests may require a formal valuation.
Step 4: Notify Creditors and Pay Valid Debts
The trustee must notify known creditors of the trustor’s death and review claims against the trust estate. Under California Probate Code § 19003, creditors generally have one year from the date of death to file claims against a trust estate (as opposed to the shorter timeframe in probate). The trustee pays valid debts from trust assets before making distributions to beneficiaries.
Step 5: File Required Tax Returns
Trust administration typically requires several tax filings:
- Final individual income tax return (Form 1040) for the year of death
- Federal estate tax return (Form 706) if the estate exceeds the federal exemption (currently $13.61 million per person in 2024)
- California estate tax — California does not currently have a separate estate tax
- Fiduciary income tax return (Form 1041 / California Form 541) for income earned by the trust after the date of death
Tax planning during trust administration can significantly affect how much beneficiaries ultimately receive. An attorney-trustee or a trustee working with experienced tax counsel can identify opportunities to minimize the tax burden.
Step 6: Retitle and Transfer Assets
The trustee must formally transfer each trust asset to its new owner — whether that means distributing assets directly to beneficiaries, retitling real estate via a deed recorded with the county recorder, transferring brokerage accounts, or distributing personal property. Each type of asset has its own transfer process and documentation requirements.
For real estate, the trustee records a deed of distribution or trustee’s deed transferring the property from the trust to the beneficiary or new owner. The trustee should also file a Preliminary Change of Ownership Report (PCOR) with the county assessor at the time of transfer.
Step 7: Prepare a Fiduciary Accounting
Under California Probate Code § 16062, trustees must account to beneficiaries at least annually and at the termination of the trust. A formal fiduciary accounting details all receipts, disbursements, gains, losses, and distributions during the accounting period. Beneficiaries have the right to review and object to the accounting.
In contested administrations, the accounting may be subject to court review. An accurate, well-prepared accounting protects the trustee from later claims of mismanagement or breach of fiduciary duty.
Step 8: Make Final Distributions
Once debts are paid, taxes are resolved, and the accounting is approved (either by beneficiaries or by the court), the trustee makes final distributions according to the trust’s terms. The trustee obtains receipts and releases from beneficiaries to document that distributions were made and accepted.
How Long Does Trust Administration Take?
A straightforward trust administration — single property, cooperative beneficiaries, no tax complications — can be completed in 12–18 months. Complex administrations involving business interests, multiple properties, contested accountings, or beneficiary disputes may take significantly longer.
When Is a Professional Trustee Needed?
Many families successfully administer trusts using a family member trustee. But in some situations — family conflict, complex assets, a trustee who lives out of state, or a trust that will last for years — a professional trustee is the right choice. A professional trustee brings legal and financial expertise to the role, and can handle all aspects of the administration including legal filings, tax coordination, and court appearances.
Amy Harrington has managed hundreds of trust administrations since 2005. If you need a professional trustee or guidance on a trust administration in the San Francisco Bay Area, call 415-558-7700 or contact us here.
This article is for general informational purposes only and does not constitute legal advice.