Trust Administration in California

The first weeks: securing the trust property

Before anything is sold or distributed, the trustee takes control and documents what the trust owns:

• Locate the original trust, every amendment and the pour-over will.
• Order certified copies of the death certificate.
• Secure the home, vehicles and valuables, and keep insurance in force.
• Obtain an employer identification number (EIN) for the now-irrevocable trust.
• Open a trust account so income and expenses are never mixed with personal funds.
• Gather statements, deeds and recent tax returns, and list any assets left outside the trust.

Notice to beneficiaries and heirs

California requires the trustee to serve a notification on every beneficiary and on the decedent’s heirs within 60 days after the trust becomes irrevocable (Probate Code §16061.7). The notice must contain specific information, including the trustee’s name and address and a statement that the recipient may request a copy of the trust terms. A beneficiary or heir who wants to contest the trust generally must do so within 120 days after the notice is served, or 60 days after a requested copy of the trust is delivered, whichever is later (§16061.8). Serving the notice correctly starts that clock.

Valuing assets and the step-up in basis

The trustee obtains date-of-death values for real estate, securities and business interests. Those values set the new income tax basis for inherited property (Internal Revenue Code §1014), which can eliminate capital gains tax on appreciation during the decedent’s lifetime. For a married couple’s community property, both halves generally receive a new basis at the first death (§1014(b)(6)). Appraisals also support the property tax filings, the estate tax analysis and a fair division among beneficiaries.

Property tax and real estate

A change in ownership statement (form BOE-502-D) is due to the county assessor within 150 days after the date of death (Revenue and Taxation Code §480). Real property passing to children qualifies for the Proposition 19 parent-child exclusion only if it is a family home that becomes the child’s principal residence or a family farm, and only up to the parent’s taxable value plus $1,044,586 for transfers between February 16, 2025 and February 15, 2027; the claim must be filed with the assessor. A home that will be sold is maintained, insured and listed by the trustee, and the sale is documented for the accounting.

Debts, expenses and creditor claims

The trustee pays valid debts, final expenses and the costs of administration from trust assets before distributing. California offers an optional procedure for trust creditor claims (Probate Code §19000 and following) in which notice is published and given to known creditors, cutting off late claims. Whether to use it depends on the decedent’s debts and the risk of unknown claims. Beneficiaries should not receive distributions until the trustee is confident enough remains for taxes and claims.

Income tax and estate tax returns

The trustee arranges the decedent’s final personal income tax returns and, during the administration, the trust’s own returns (federal Form 1041 and California Form 541) when the trust has income. A federal estate tax return (Form 706) is due nine months after death if the gross estate exceeds the exemption — $15 million per person in 2026 — and is often filed for a married decedent even when no tax is due, to elect portability of the unused exemption for the surviving spouse. California has no estate or inheritance tax.

Keeping beneficiaries informed and accounting

A trustee must keep beneficiaries reasonably informed and respond to their reasonable requests for information (Probate Code §16060–16061), and must account to beneficiaries at least annually, when the trust terminates and when the trustee changes, unless an exception applies (§16062). A clear accounting lists what the trust held at the start, every receipt and disbursement, gains and losses, and what remains. Beneficiaries who approve the accounting and sign a receipt and release give the trustee closure.

Trustee compensation and getting help

A trustee is entitled to the compensation the trust provides or, if the trust is silent, reasonable compensation under the circumstances (Probate Code §15681), and may hire attorneys, accountants and appraisers at the trust’s expense. A trustee who cannot or does not want to serve can decline or resign under the trust’s terms. Family members who serve as trustee often handle day-to-day tasks while the attorney handles the notices, the legal questions and the documentation.

When the court becomes involved

Most trust administrations never go to court. A petition may be needed to confirm that an asset left outside the trust belongs to it (a Heggstad petition, Probate Code §850), to interpret an unclear provision, to approve an accounting, to resolve a dispute among beneficiaries or to remove a trustee (§17200, §15642). Trust proceedings are generally filed in the superior court of the county where the trust is principally administered (§17005).