By Tam Berhe, Esq. | The Berhe Law Firm, APC
Being named as a successor trustee in a loved one's living trust is an honor - and a responsibility that most people are completely unprepared for. The grantor (the person who created the trust) typically names a spouse, adult child, or close friend as successor trustee based on trust, not legal training. Then the grantor dies, and the trustee suddenly must navigate an unfamiliar legal and administrative process while also grieving.
This guide is meant to help. It walks through the key steps of trust administration in California, explains the legal framework, and identifies where the most common - and most costly - mistakes get made.
If you're a California successor trustee, read this before you do anything else.
What Trust Administration Is - and Is Not
Trust administration is the process of winding down the grantor's affairs and distributing the trust's assets to the beneficiaries according to the trust document's instructions. It is not probate - one of the primary advantages of a properly funded revocable living trust is that it avoids the court-supervised probate process entirely.
But "avoiding probate" does not mean "no administration required." Trust administration is a real legal process with legal deadlines, fiduciary duties, tax obligations, and potential personal liability for the trustee who does it wrong.
The California Uniform Trust Code, codified at Probate Code §§ 15000 et seq., governs trustee duties and liabilities. A successor trustee who makes errors - pays the wrong beneficiaries, fails to identify and address trust debts, makes improper distributions, or mismanages trust assets - can be held personally liable for resulting losses.
This is not meant to be alarming. It's meant to be honest about what the role requires.
Step 1: Obtain the Death Certificate
You will need multiple certified copies of the death certificate - typically 10 to 15. Financial institutions, government agencies, real property transactions, and various administrative processes all require original certified copies, not photocopies. Order more than you think you need.
Step 2: Locate and Read the Trust Document
Before you do anything else, read the entire trust document. You need to understand:
- Who the beneficiaries are and what they're entitled to receive
- Whether any distributions are conditional (e.g., outright distribution vs. held in trust for a minor)
- Whether there are specific bequests of particular assets
- What the trustee's powers are
- Any instructions about how the trust should be administered
- Whether the trust contains a no-contest clause (which can affect how disputes with beneficiaries are handled)
If the trust document is ambiguous about anything important, get legal advice before proceeding. It is far easier and less expensive to clarify ambiguities before taking action than to undo improperly made distributions.
Step 3: Send the Statutory Notice to Beneficiaries and Heirs
Within 60 days of becoming trustee, California Probate Code § 16061.7 requires you to notify trust beneficiaries and the grantor's heirs at law (people who would inherit under intestacy law, even if they're not named in the trust) of:
- The existence of the trust
- The identity of the trustee
- Their right to request a copy of the trust
This notice triggers a 120-day statute of limitations on trust contests. A beneficiary or heir who does not contest the trust within 120 days of receiving the notice (or within 60 days of receiving a copy of the trust, whichever is later) generally cannot later challenge its validity.
Failing to send this notice doesn't just miss a deadline - it can expose the trustee to personal liability and delay the administration indefinitely. Send it promptly, and send it by a method that creates a record (certified mail).
Step 4: Inventory the Trust Assets
Identify and document all assets that are titled in the name of the trust or that otherwise pour into the trust at the grantor's death. This includes:
- Real property (obtain preliminary title reports)
- Bank and investment accounts titled in the trust's name
- Assets with the trust as beneficiary
- Business interests held by the trust
- Personal property of significant value
Also identify assets that were not in the trust - these may need to go through a simplified probate proceeding (a Heggstad petition under Probate Code § 850 can sometimes bring assets into the trust without full probate) or a standard small estate affidavit procedure if they fall below the California threshold.
Step 5: Address Debts and Taxes
The trust is responsible for the grantor's outstanding debts and final tax obligations before distributions are made to beneficiaries.
For tax purposes, the grantor's final income tax return (Form 1040) is due by April 15 of the year following death. If the estate is large enough to require a federal estate tax return (currently, estates over $13.61 million as of 2024), Form 706 is due nine months after the date of death. California does not have a separate estate or inheritance tax.
A trustee who distributes assets to beneficiaries before paying known debts and taxes can be personally liable for those obligations. Do not distribute before clearing debts.
Step 6: Obtain a Taxpayer ID for the Trust
A revocable living trust uses the grantor's Social Security number during the grantor's lifetime. After the grantor's death, the trust becomes irrevocable and requires its own Employer Identification Number (EIN) from the IRS. Obtain this promptly - it's required to open trust bank accounts, manage trust investments, and file trust tax returns.
Step 7: Manage Trust Assets During Administration
You have a fiduciary duty to the beneficiaries while administering the trust. This means:
- Investing trust assets prudently under the California Uniform Prudent Investor Act (Prob. Code § 16045 et seq.)
- Keeping trust assets separate from your personal assets
- Maintaining accurate records of all transactions
- Acting impartially between current and remainder beneficiaries
- Avoiding self-dealing (you cannot benefit personally from trust transactions at the expense of beneficiaries)
Step 8: Prepare and Send an Accounting
California trustees have an obligation to account to beneficiaries under Probate Code § 16062. Unless the trust waives this requirement, you must provide a formal accounting that documents all trust transactions: assets received, income earned, expenses paid, and distributions made.
The accounting must be sent to each beneficiary who is entitled to an account. Beneficiaries have the right to object to the accounting and to petition the court if they believe the trustee has acted improperly.
Step 9: Make Final Distributions
After debts and taxes are paid, the accounting is complete (or the deadline for objections has passed), and any disputes are resolved, you can make final distributions to beneficiaries according to the trust's terms.
Before distributing, obtain signed receipts and releases from each beneficiary - acknowledging that they received their distribution and releasing the trustee from further liability with respect to that distribution. This provides you with protection against subsequent claims.
Where Things Go Wrong
The most common trust administration errors I see:
- Failing to send the § 16061.7 notice promptly. Missing this deadline or sending it improperly can create significant problems.
- Distributing before debts are cleared. Personal liability exposure for the trustee.
- Mixing trust and personal funds. A clear breach of fiduciary duty.
- Ignoring unfunded assets. Property not titled in the trust that the grantor intended to be distributed through it.
- Acting on verbal instructions from beneficiaries rather than the trust document. The trust document controls, not what someone remembers being told.
Trust administration does not require court supervision, but it does benefit significantly from legal guidance - particularly in the early stages when procedural errors are most likely. The Berhe Law Firm, APC assists California trustees through the administration process, from the initial notice to final distribution. If you've recently become a successor trustee and aren't sure where to start, contact us for a consultation.
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