If you’ve been named trustee of a California trust and the person who created it has died, administering a trust in California after death means working through a defined sequence of legal, tax, and administrative tasks under the Probate Code. You have 60 days to notify beneficiaries, 150 days to file a change in ownership statement on real estate, and ongoing duties to account, invest prudently, and distribute strictly according to the trust document. The steps below are the order most trustees should follow.
Your First Weeks as Trustee
Start with the document itself. Read the trust cover to cover, along with any amendments or restatements. You need to know who the beneficiaries are, what the trust owns, how distributions are supposed to work, and whether the document imposes conditions or restrictions on your authority. Order several certified copies of the death certificate from the county vital records office. Banks, title companies, and government agencies each want their own.
Once the trustor dies, a revocable trust becomes irrevocable and can no longer use the trustor’s Social Security number. Apply for an Employer Identification Number (EIN) through the IRS website. It takes a few minutes online, and every financial institution holding trust assets will ask for it before retitling anything.
File IRS Form 56 to notify the IRS that you are the fiduciary now acting for the trust. This establishes your authority on tax matters and makes sure IRS correspondence reaches you.1Internal Revenue Service. Instructions for Form 56
Hire a trust administration attorney early. Legal fees are a legitimate trust expense, and the cost of good advice is almost always less than the cost of a mistake you have to unwind later.
Notify Beneficiaries Within 60 Days
California requires you to serve a formal written notification on all beneficiaries of the irrevocable trust and all legal heirs of the trustor within 60 days of the trustor’s death.2California Legislative Information. California Code PROB 16061.7 The same notice is required whenever an irrevocable trust changes trustees.
The notice must contain:
- The name of the settlor and the date the trust was signed
- Your name, address, and phone number as trustee
- The physical address where you administer the trust
- A statement that the recipient may request a complete copy of the trust
- A boldface warning that the recipient has 120 days from the date of service to bring a legal action contesting the trust. If you don’t attach the full trust and the recipient later requests and receives a copy during that window, they get 60 additional days from receipt, whichever deadline falls later3California Legislative Information. California Code PROB 16061.7
That 120-day contest period is the main reason you don’t distribute anything early. A successful contest could change who gets what, and distributions you can’t claw back become your personal problem. For mailed notice, the clock starts when you deposit the notice in the mail, not when the recipient opens it.
Inventory and Retitle the Trust’s Assets
Build a complete list of what the trust owns: real estate, bank and brokerage accounts, retirement accounts naming the trust as beneficiary, life insurance payable to the trust, business interests, vehicles, and significant personal property. Pull together deeds, statements, policies, and titles for each one.
Then take control. For financial accounts, bring each institution the death certificate, the trust document, your EIN, and your ID, and have accounts retitled in your name as trustee. For real estate, record an affidavit of death of trustee along with a certified death certificate in the county where the property sits. That records your authority publicly.
Value every asset as of the date of death. You need those values for tax reporting and for the stepped-up basis rule, which resets each asset’s tax basis to its fair market value at death. When a beneficiary later sells inherited property, they owe capital gains tax only on appreciation above that stepped-up value. Pay for professional appraisals of real estate and closely held businesses; the cost is small compared to the tax exposure if you get the number wrong.
Real Estate, Change of Ownership, and Proposition 19
Real estate is usually the biggest asset and the easiest place to get burned. On top of recording the affidavit of death, you must file a change in ownership statement with the county assessor. For a transfer at death with no probate, the deadline is 150 days from the date of death.4California State Board of Equalization. Change in Ownership – Frequently Asked Questions When you record the deed or affidavit, file a Preliminary Change of Ownership Report (PCOR) with it. Skipping the PCOR adds a $20 recording fee and, more importantly, slows the assessor’s review of any property tax exclusion.
Under Proposition 19 (Revenue and Taxation Code Section 63.2), the old blanket parent-to-child property tax exclusion is gone. A child inheriting a parent’s home keeps the parent’s lower assessed value only if the child moves in as their primary residence within one year of the transfer. Even then, if current market value exceeds the parent’s assessed value by more than $1,044,586 (the adjusted limit for transfers between February 16, 2025, and February 15, 2027), the excess is added to the taxable value.5California State Board of Equalization. Proposition 19 Fact Sheet Rental properties, vacation homes, and other non-primary-residence real estate get reassessed at current market value, which can mean a dramatic property tax increase.
To claim the exclusion, the beneficiary files Form BOE-19-P with the county assessor within three years of the transfer (and before any sale to a third party), and files for the homeowners’ exemption within one year of the transfer. Missing the one-year homeowners’ exemption deadline doesn’t kill the exclusion, but it delays the start date to the year the claim is actually filed.5California State Board of Equalization. Proposition 19 Fact Sheet This is the most common expensive mistake in California trust administration. If a beneficiary is inheriting real property, make sure they know these deadlines in writing.
Handle Creditor Claims Before You Distribute
Assets that were in the trustor’s revocable trust during their lifetime can be reached by the trustor’s creditors after death, to the extent the probate estate can’t cover those debts.6California Legislative Information. California Code PROB 19001 Because trust-based plans are designed to avoid probate, the trust often absorbs the full weight of any outstanding debts.
California gives you a way to shut this exposure down. You can file a proposed notice to creditors with the court, publish the notice, and serve known creditors, which starts a formal claims period.7California Legislative Information. California Code PROB 19003 Creditors who miss the deadline lose their claim. The process is optional, but for any trust with significant assets or suspected unknown debts, it’s protective. Distributing to beneficiaries while unknown creditors are still out there puts you personally on the hook.
File the Tax Returns
Trust administration triggers several tax filings, and trustees often confuse them:
- The trustor’s final personal return (Form 1040) covering January 1 through the date of death. You file this.
- The trust’s own income tax return (Form 1041), filed annually while the trust is open. Income distributed to beneficiaries passes through to their personal returns on Schedule K-1.8Internal Revenue Service. About Form 1041, U.S. Income Tax Return for Estates and Trusts
- A federal estate tax return (Form 706) if the trustor’s total estate exceeds the federal exemption ($13.99 million in 2025, indexed for inflation). California has no state estate or inheritance tax.
Track income, expenses, and distributions in detail from day one. The same records feed both the tax returns and the accountings you owe beneficiaries.
Invest Trust Assets Prudently While the Trust Is Open
You have an ongoing duty to manage trust investments under California’s prudent investor rule, which looks at the trust’s purposes, distribution requirements, risk and return objectives, inflation, tax consequences, and the beneficiaries’ needs for income and liquidity.9California Legislative Information. California Code PROB 16047 The law judges your decisions on the portfolio as a whole, not one investment in isolation, and expects diversification unless the trust specifically tells you to hold a particular asset. If you lack investment experience, delegate to a professional advisor and monitor their work. Routine administration also includes collecting rents and other income, maintaining real estate, paying insurance, and covering regular expenses out of trust funds, with records of every payment.
Account to Beneficiaries
You must provide formal accountings to beneficiaries at least annually, when the trust terminates, and whenever there’s a change of trustee.10California Legislative Information. California Code PROB 16062 You don’t account for any period the trust was still revocable, the trust document can waive the requirement, and a beneficiary can waive it in writing (though they can withdraw that waiver for future transactions). A court can always compel an accounting if a breach is suspected.11California Legislative Information. California Code PROB 16064
A proper accounting includes all receipts and disbursements of principal and income for the period, a statement of assets and liabilities at period end, your compensation, any agents you hired and what you paid them, a notice that the beneficiary may petition the court to review the accounting, and a notice that claims against you for breach of trust must be brought within three years of the beneficiary receiving the accounting.12California Legislative Information. California Code PROB 16063 That three-year clock cuts both ways: beneficiaries have a limited window to challenge, and you eventually get finality on properly disclosed transactions.
Paying Yourself as Trustee
California entitles you to reasonable compensation. If the trust document sets the amount, that controls. Otherwise, “reasonable” turns on the trust’s complexity, the size of the estate, the time involved, and the skill required.13California Legislative Information. California Code PROB 15681 Professional trustees typically charge a percentage of assets; family-member trustees usually bill hourly or take a flat fee. Document your time and tasks before you pay yourself anything. Taking compensation without clean records is a direct invitation to a beneficiary challenge.
Distribute the Assets and Close the Trust
Once debts and taxes are paid, creditor claims resolved, the 120-day contest period has run, and beneficiaries have received their accounting, you distribute what’s left according to the trust’s instructions. Distributions may be outright, staggered, or contingent on things like a beneficiary reaching a certain age. Follow the terms exactly; informal arrangements breed disputes.
Before any final distribution, prepare a final accounting covering the full administration and send it to each beneficiary with a proposed distribution plan. Ask each beneficiary to sign a written receipt and release confirming they received their share and releasing you from further liability. Beneficiaries aren’t required to sign, but most will when the accounting is clear. A signed release is your strongest protection against future claims.
After distributing everything, file the trust’s final Form 1041 for its last tax year, close trust bank accounts, and cancel the EIN. At that point your duties end.
If You Breach Your Duties
A trustee who breaches the trust can be held liable for any loss in value the trust suffered because of the breach plus interest, any profit the trustee personally made plus interest, and any profit the trust would have earned but for the breach.14California Legislative Information. California Code PROB 16440 A court has some discretion to reduce liability where you acted reasonably and in good faith, but that’s not a plan.
A court can also remove you entirely. Grounds include committing a breach, being unfit, failing or declining to act, taking excessive compensation, and co-trustee hostility that impairs administration.15California Legislative Information. California Code PROB 15642 The trustees who get sued share a pattern: they treated the role casually, kept poor records, mixed trust funds with personal funds, or made decisions without going back to the trust document. Treat the trust’s money as what it is, which is somebody else’s.