When a loved one passes away, serving as trustee can feel overwhelming. Trust administration involves legal duties, strict deadlines, and detailed financial responsibilities. Below is a general overview of the trust administration process in California and what trustees should expect. A Orange, CA trust administration lawyer can help trustees navigate these responsibilities, comply with California law, and efficiently manage the administration process.
After the settlor’s death, the trustee must obtain a new Employer Identification Number (EIN) for the trust by filing IRS Form SS-4. The trust becomes a separate tax entity, and the decedent’s Social Security number may no longer be used.
The trustee may also need to file Form 56 to notify the IRS of the fiduciary relationship and, during administration, file fiduciary income tax returns (Form 1041).
California law imposes strict notice requirements.
Under Probate Code §16061.7, the trustee must provide formal notice to all beneficiaries and heirs within 60 days of the settlor’s death. This notice must include:
Once notice is given, beneficiaries generally have 120 days to contest the trust.
Additionally, notice must be sent to the California Department of Health Care Services (DHCS), along with a copy of the death certificate. DHCS has four months to file a claim.
The trustee must identify, collect, and safeguard all trust assets. This often includes:
If funds are deposited into financial institutions, they must generally be placed in insured, interest-bearing accounts.
Trustees may also notify known creditors and, if appropriate, publish notice. Creditors typically have four months to bring a claim.
Trustees have broad authority under California law and the trust document. In most cases, court permission is not required to:
In some situations, a trustee may provide a Notice of Proposed Action (NOPA) before taking certain actions. Beneficiaries must be given at least 45 days to object. If an objection is received, the trustee or beneficiary may petition the court for approval.
Trustees have a duty to provide accounting to beneficiaries. Accountings are typically required:
A proper trust accounting details income, expenses, distributions, and trust assets.
Once debts, taxes, and administrative matters are resolved, the trustee may distribute the remaining trust assets to beneficiaries in accordance with the trust terms.
Final distribution typically includes:
Trust administration involves legal compliance, tax filings, creditor issues, and fiduciary duties. Mistakes can lead to personal liability for trustees and unnecessary conflict among beneficiaries.
If you have been named trustee or need assistance administering a trust, consulting with experienced legal counsel can help ensure the process is handled efficiently and in compliance with California law. If you have questions or need assistance updating lease documents, feel free to call our Katje Law Group at (714)-400-2970 to speak with one of our knowledgeable attorneys.
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Ms. Katje earned her Juris Doctorate at California Western School of Law, San Diego, California, graduated Cum Laude and was a Dean’s Honor List recipient. She was also a recipient of the American Jurisprudence Award in Contracts I and Contracts II. Ms. Katje was a member of the Law Review and International Law Journal at California Western School Law, where she was an Associate Editor.
