A California trust administration checklist for trustees is a sequenced to-do list keyed to the deadlines in the Probate Code: locate the trust, notify beneficiaries and heirs within 60 days, notify specific government agencies on their own clocks, inventory and value assets as of the date of death, pay debts, file the required tax returns, account to beneficiaries, and then distribute what remains. Miss a step and the consequences can be personal — a court can remove a trustee for breach of trust, unfitness, or failure to act, and a trustee at fault for losses can be ordered to make beneficiaries whole.1California Legislative Information. California Code PROB 15642 – Removal of Trustee
Week One: Documents, Death Certificates, and a Beneficiary List
Find the original trust instrument along with every amendment and restatement signed during the settlor’s lifetime. Check home filing cabinets, safe deposit boxes, and the drafting attorney’s office. You need these to confirm your authority and understand the distribution plan.
Order certified copies of the death certificate from the county registrar or the California Department of Public Health. A certified copy costs $26 as of January 1, 2026.2California Department of Public Health. Vital Records Fees Six to ten copies is a reasonable starting number, because every bank, brokerage, insurer, and government agency will want one.
While you’re gathering paperwork, build a list of every trust beneficiary and every legal heir of the settlor, with full names, mailing addresses, and phone numbers. You’ll need it almost immediately.
The 60-Day Beneficiary and Heir Notification
When a revocable trust becomes irrevocable because the settlor died, California requires you to serve a formal notification on every named beneficiary and every legal heir within 60 days of the date of death.3California Legislative Information. California Code Probate Code 16061.7 – Trustees Duty to Serve Notification The notice must include specific information about the trust and the trustee and carry a boldface warning that recipients have the right to contest.
That warning starts a clock on them. Each recipient has 120 days from service to bring an action contesting the trust, or 60 days from receiving a copy of the actual trust terms, whichever is later.4California Legislative Information. California Code Probate Code 16061.8 Missing the 60-day service deadline can expose you to lawsuits for damages and attorney fees from anyone who should have received the notice. Many trustees wait until the 120-day contest window closes before taking major actions, since a successful contest can change everything that follows.
Government Agency Deadlines Running in Parallel
Two more clocks start at the date of death:
- Medi-Cal recovery notice — 90 days. If the settlor ever received Medi-Cal benefits at age 55 or older, send written notice of the death, with a copy of the death certificate, to the Director of the Department of Health Care Services within 90 days. DHCS will determine whether the state has a recovery claim against the trust.5Department of Health Care Services. Important Notice Regarding the Medi-Cal Estate Recovery Program for Beneficiaries 55 Years of Age or Older
- Change in Ownership Statement — 150 days. If the trust holds California real estate, file Form BOE-502-D with the county assessor in each county where property is located, within 150 days of the date of death. The filing lets the assessor evaluate any property tax exclusions.6California State Board of Equalization. Death of a Real Property Owner – Reporting Requirements
These deadlines run alongside the 60-day beneficiary notice, so you’re juggling multiple clocks in the first months. A calendar with every deadline mapped out is worth the twenty minutes.
Inventory, Date-of-Death Values, EIN, and Trust Bank Account
Identify every asset the trust owned at the date of death: real estate, bank accounts, brokerage holdings, retirement accounts, life insurance, business interests, vehicles, jewelry, and collectibles. For each one, obtain a valuation reflecting fair market value as of the date of death. Real estate usually calls for a professional appraisal, which runs roughly $450 to $1,400 depending on the property.
Getting the valuations right is a tax issue, not a formality. Under federal law, most assets a person owns at death receive a new tax basis equal to fair market value on the date of death.7Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent If the settlor bought a home for $200,000 and it was worth $900,000 at death, the beneficiary’s basis resets to $900,000, eliminating capital gains tax on $700,000 of appreciation. The reset works only if you have documentation of the date-of-death value.
The settlor’s Social Security number can no longer be used for the trust after death. Apply for a federal Employer Identification Number online with the IRS or by submitting Form SS-4.8Internal Revenue Service. Instructions for Form SS-4 Then open a dedicated trust bank account for every receipt, expense, and distribution during administration. Mixing trust money with personal funds is a basic fiduciary violation.
A Note on Retirement Accounts
IRAs and 401(k)s follow their own distribution rules regardless of what the trust document says. When the trust itself is named as the IRA beneficiary rather than an individual, the IRS treats the trust as a non-individual beneficiary. If the account holder died before reaching the age when required minimum distributions begin, the account must generally be emptied within five years; if they died after that point, distributions can be stretched over the remaining life expectancy of the account holder or the oldest trust beneficiary.9Internal Revenue Service. Retirement Topics – Beneficiary Talk to a tax professional before touching retirement assets.
Managing Investments While the Trust Is Open
During administration, you are not just holding the assets. California’s Uniform Prudent Investor Act requires you to invest and manage trust property the way a careful investor would, considering the trust’s purposes, distribution timeline, and the beneficiaries’ circumstances, with reasonable care, skill, and caution.10Justia Law. California Code Probate Code 16045-16054 – Uniform Prudent Investor Act
The law looks at the portfolio as a whole, not each asset in isolation. A single speculative holding is not automatically a problem inside a diversified mix; concentrating everything in one stock, even a well-known one, can violate the duty to diversify. Where the trust has both current income beneficiaries and remainder beneficiaries, you have to balance their competing interests rather than favoring whoever is asking for money now. If you hold professional investment credentials, the standard rises with your expertise, and for complex portfolios delegating to a professional advisor is permitted.
Debts and the Optional Creditor Cutoff
Before distributing anything, resolve the settlor’s outstanding debts. Review bank statements, credit card bills, loan documents, and medical bills. Legitimate debts are paid from trust assets.
California gives you an optional tool to shorten the window on creditors. File a proposed notice to creditors with the superior court and publish it in a local newspaper. The published notice gives creditors four months from the date of first publication to file their claims, and any claim not filed within that window is barred from collection against trust assets.11California Legislative Information. California Code PROB 19003 – Notice to Creditors The notice must be published at least three times in a newspaper of general circulation where the settlor lived, with at least five days between the first and last publication dates.12Justia Law. California Code Probate Code 19040-19041 – Publication of Notice
Skip the formal process and creditors generally have about a year from the date of death to pursue claims under the general statute of limitations. The formal process also protects you from personal liability if a creditor surfaces after you have already distributed assets.
Tax Returns You Have to File
Two categories of returns fall to the trustee.
The settlor’s final individual income tax return (Form 1040 or 1040-SR) covers January 1 of the year of death through the date of death and is prepared largely as if the person were still alive.13Internal Revenue Service. File the Final Income Tax Returns of a Deceased Person
If the trust earns any taxable income or $600 or more in gross income during the tax year, file Form 1041 for the trust itself.14Internal Revenue Service. Instructions for Form 1041 and Schedules A, B, G, J, and K-1 Trusts hit the top bracket at compressed income levels, so distributing income to beneficiaries during the tax year — which shifts the tax to them at typically lower rates — is a common and legitimate approach. With Form 1041, prepare a Schedule K-1 for each beneficiary who received or was entitled to a share of the trust’s income so they can report it on their personal returns.15Internal Revenue Service. Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR Do not distribute all trust cash before setting aside enough to pay what the trust itself owes. If you do and the IRS comes looking, you are personally on the hook.
Federal Estate Tax and the Portability Election
Most estates will not owe federal estate tax, but check. For 2026, the basic exclusion amount is $15,000,000 per person, set by the One Big Beautiful Bill Act signed in July 2025, with inflation adjustments beginning in 2027.16Internal Revenue Service. Whats New – Estate and Gift Tax The top rate remains 40% on amounts above the exclusion. If the gross estate plus lifetime taxable gifts exceeds $15,000,000, file Form 706 within nine months of the date of death; an automatic six-month extension is available by filing Form 4768 before the original deadline.17Internal Revenue Service. Frequently Asked Questions on Estate Taxes
Even well under the threshold, one scenario makes Form 706 matter: portability. If the settlor was married and did not use their full exemption, filing Form 706 allows the surviving spouse to claim the unused portion. The election has to be made on a timely filed Form 706, and missing it can cost the surviving spouse millions in future estate tax savings.
Accounting to Beneficiaries
California requires trustees to provide a formal accounting at least once a year, whenever the trust terminates, and whenever a new trustee takes over.18California Legislative Information. California Code PROB 16062 – Duty to Account A trust accounting is not a bank statement. It should detail every receipt (income, asset sales, insurance proceeds), every disbursement (debts paid, trustee fees, professional costs), the current value of remaining assets, and any gains or losses during the period.
Beneficiaries can waive the accounting, which speeds administration. But if a sole trustee is a disqualified person under the Probate Code — someone in a position to exert undue influence over the settlor — a waiver of the accounting duty in the trust instrument is void as against public policy. Good day-one recordkeeping makes the formal accounting easier and, if a beneficiary ever challenges your administration, becomes your defense.
Trustee Pay and Personal Liability
You are entitled to be paid. If the trust document specifies a compensation formula, follow it. If it is silent, you are entitled to reasonable compensation under the circumstances.19California Legislative Information. California Code Probate Code 15681 – Compensation of Trustee What is reasonable depends on the size and complexity of the estate, the hours involved, and your expertise. Professional corporate trustees typically charge between 1% and 3% of trust assets annually. Family-member trustees often charge less but can seek compensation in that range for complex administrations. Keep careful time records.
Excessive compensation is itself a ground for removal. Other grounds include breaching fiduciary duties, becoming insolvent, failing to act when action is required, and hostility between co-trustees that impairs administration.1California Legislative Information. California Code PROB 15642 – Removal of Trustee A trustee personally at fault for losses can be held personally liable to make beneficiaries whole.20Justia Law. California Code Probate Code 18000-18005 – Liability of Trustee to Third Persons
Distributing and Closing the Trust
Once debts are paid, taxes filed, and the contest window closed, you can distribute according to the trust’s terms. Deliver a final accounting to all beneficiaries first, showing starting values, income received, expenses paid, and the balance available for distribution.
One trap for well-meaning trustees: you cannot require a beneficiary to sign a release of liability as a condition of receiving a distribution the trust requires you to make.21California Legislative Information. California Code PROB 16004.5 – Release of Liability Conditioning an inheritance on a waiver is itself a breach of fiduciary duty. You can ask beneficiaries to sign a receipt confirming what they received, and you can request a voluntary release after full financial disclosure. “Sign this or you don’t get your money” is not permitted.
For real property, prepare and record a new deed with the county recorder transferring title from the trust to each beneficiary. For bank and brokerage accounts, coordinate directly with the institution to transfer funds or re-register securities. Have beneficiaries sign distribution receipts confirming what they received.
Once every asset has been distributed, every bill paid, and every return filed, close the trust bank account and the EIN. Keep the administration records for at least several years. Tax audits and beneficiary disputes can surface well after the trust is officially wound down.