If you have just become the successor trustee of a California revocable trust, your California trust administration checklist starts the day the settlor dies and runs through final distribution: find the trust documents, notify beneficiaries and heirs within 60 days, inventory and value every asset as of the date of death, handle creditors and tax filings, manage the assets under fiduciary standards, provide accountings, and distribute what remains according to the trust’s terms. The deadlines are real, and several of them run at the same time.
First Steps After the Death
Find the original trust instrument along with every amendment and restatement the settlor signed. Check home files, safe deposit boxes, and the drafting attorney’s office. You need these documents to confirm your authority and to see exactly how assets are supposed to be distributed.
Order certified copies of the death certificate from the county registrar or the California Department of Public Health. Six to ten copies is a reasonable starting point, because every bank, brokerage, insurance company, and government agency will want its own. While you are collecting paperwork, build a list of every trust beneficiary and every legal heir of the settlor, with full names, mailing addresses, and phone numbers. You will need that list within weeks.
The 60-Day Beneficiary Notification
When a revocable trust becomes irrevocable because the settlor died, California law requires you to serve a formal notification on every named beneficiary and every legal heir of the settlor within 60 days of the date of death.1California Legislative Information. California Code Probate Code 16061.7 – Trustees Duty to Serve Notification The notice must contain specific information about the trust and the trustee and a boldface warning telling recipients they have the right to contest the trust.
That warning starts a clock. Once served, each recipient has 120 days to bring an action contesting the trust, or 60 days from receiving a copy of the actual trust terms, whichever falls later.2California Legislative Information. California Code Probate Code 16061.8 Miss the 60-day service deadline and you can face damages and attorney fee claims from anyone who should have received the notice. Many trustees wait for the 120-day contest window to close before making large or irreversible distributions, because a successful contest can rewrite the administration.
Other Deadline-Driven Notices
Two government agency notices run alongside the beneficiary notification and have their own clocks:
- Medi-Cal recovery notice within 90 days. If the settlor received Medi-Cal benefits at age 55 or older, send written notice of the death, with a death certificate, to the Director of the Department of Health Care Services within 90 days. DHCS then decides whether the state has a recovery claim against the trust.3Department 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 within 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, so the assessor can determine whether any property tax exclusion applies to the transfer.4California State Board of Equalization. Death of a Real Property Owner – Reporting Requirements
Because the 60-day, 90-day, and 150-day deadlines overlap, put every date on a single calendar at the start.
Inventorying and Valuing Trust Assets
Identify everything the trust owned on the date of death: real estate, bank accounts, brokerage holdings, retirement accounts, life insurance, business interests, vehicles, jewelry, collectibles. For each asset, obtain a fair market value as of the date of death. Real estate typically requires a professional appraisal.
The valuations matter for taxes as well as accounting. 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.5Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent A home bought for $200,000 and worth $900,000 at death gives the beneficiary a $900,000 basis, wiping out capital gains on the $700,000 of appreciation, but only if you can document the date-of-death value.
The settlor’s Social Security number cannot be used for trust reporting after death. Apply for a federal Employer Identification Number online with the IRS or by submitting Form SS-4.6Internal Revenue Service. Instructions for Form SS-4 Then open a dedicated trust bank account under the EIN. Do not commingle trust funds with your personal accounts; keeping them separate is a basic fiduciary requirement.
Retirement Accounts Have Their Own Rules
IRAs and 401(k)s follow federal distribution rules regardless of what the trust document says. When a trust is named as the beneficiary, the IRS treats it as a non-individual beneficiary. If the account holder died before required minimum distributions began, the account generally must be emptied within five years. If death occurred after that point, distributions can be stretched over the remaining life expectancy of the account holder or the oldest trust beneficiary.7Internal Revenue Service. Retirement Topics – Beneficiary Talk to a tax professional before touching retirement assets.
Handling Debts and Creditor Claims
Before distributing anything, resolve the settlor’s outstanding debts. Review bank statements, credit card bills, loan documents, medical bills, and correspondence for anything owed. Legitimate debts are paid from trust assets.
California offers an optional creditor notice process that is worth using. You file a proposed notice to creditors with the superior court and publish it in a newspaper of general circulation where the settlor lived. Once published, creditors have four months from the date of first publication to file their claims, and any claim not filed within that window is barred.8California Legislative Information. California Code PROB 19003 – Notice to Creditors9Justia Law. California Code Probate Code 19040-19041 – Publication of Notice Skip the formal notice, and creditors have roughly a year from the date of death to come forward under the general statute of limitations. The formal process also protects you personally if a creditor surfaces after you have already distributed assets.
Tax Returns You Must File
You are responsible for two categories of returns. The first is the settlor’s final individual income tax return (Form 1040 or 1040-SR) for the period from January 1 of the year of death through the date of death.10Internal Revenue Service. File the Final Income Tax Returns of a Deceased Person
The second is the trust’s own fiduciary return. If the trust earns any taxable income or $600 or more in gross income during the tax year, file Form 1041.11Internal Revenue Service. Instructions for Form 1041 and Schedules A, B, G, J, and K-1 Trusts hit the top federal bracket at very low income levels, so distributing income to beneficiaries during the tax year, which shifts the tax to their usually lower rates, is a common approach. For each beneficiary who received or was entitled to a share of trust income, prepare a Schedule K-1 so they can report their share of interest, dividends, capital gains, deductions, and credits.12Internal Revenue Service. Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR Hold back enough cash to cover any tax the trust itself owes before distributing to beneficiaries. If you distribute first and the IRS comes looking, you are personally on the hook.
Federal estate tax applies only to large estates. For 2026, the basic exclusion amount is $15,000,000 per person, and the top rate on amounts above it is 40%.13Internal Revenue Service. 14Internal Revenue Service. Frequently Asked Questions on Estate Taxes Even for estates well below the threshold, if the settlor was married, ask a tax professional whether a portability election on a timely-filed Form 706 makes sense. That election lets the surviving spouse claim the settlor’s unused exemption, and missing the filing deadline forfeits it.
Managing Assets During Administration
You are not just holding assets in place. California’s Uniform Prudent Investor Act requires you to invest and manage trust property the way a careful investor would, using reasonable care, skill, and caution, considering the trust’s purposes, distribution timeline, and the beneficiaries’ circumstances.15Justia Law. California Code Probate Code 16045-16054 – Uniform Prudent Investor Act
Decisions are judged on the portfolio as a whole, not asset by asset. A speculative holding inside a diversified mix is not automatically a breach; parking everything in one stock, even a strong one, can be. You are expected to think about economic conditions, inflation, taxes, and each beneficiary’s needs.
When the trust has both current income beneficiaries and remainder beneficiaries, you have to balance their competing interests. Investing purely for growth starves the income beneficiary; investing purely for income shortchanges the remainder. This is where first-time trustees most often go wrong, because the pressure comes from whoever is asking for money right now. If you have professional investment credentials, the law measures you against that higher expertise. For complex portfolios, hiring and delegating to a professional investment advisor is permitted.
Accounting to Beneficiaries
California requires trustees to provide a formal accounting to beneficiaries at least annually, when the trust terminates, and when a new trustee takes over.16California Legislative Information. California Code PROB 16062 – Duty to Account A trust accounting is not a bank statement. It should show every receipt (income, asset sales, insurance proceeds), every disbursement (debts, trustee fees, professional costs), the current value of what remains, and any gains or losses for the period.
Beneficiaries can waive the accounting requirement. But if a sole trustee is what the Probate Code treats as a disqualified person, roughly 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. Some trustees cannot escape the accounting obligation regardless of what the trust document says.
Good records make the formal accounting straightforward. Track every dollar in and out of the trust account, keep copies of every bill paid, save appraisals and returns, and document your reasoning on investment decisions. If a beneficiary later challenges you, those records are your defense.
Distributing the Assets and Closing the Trust
Once debts are paid, taxes are filed, and the contest window has closed, you can distribute according to the trust’s terms. Before sending anything out, deliver a final accounting to all beneficiaries covering starting values, income, expenses, and the final balance available.
One rule catches well-meaning trustees off guard: you cannot require a beneficiary to sign a release of liability as a condition of receiving a distribution the trust requires you to make.17California Legislative Information. California Code PROB 16004.5 – Release of Liability Conditioning an inheritance on signing a waiver is itself a breach of fiduciary duty. You can ask for a receipt confirming what was delivered, and you can request a voluntary release after full financial disclosure, but “sign this or you don’t get your money” is not allowed.
For real property, prepare and record a new deed with the county recorder to move title from the trust to the beneficiary. For bank and brokerage accounts, coordinate with the institution to transfer funds or re-register securities. Get signed distribution receipts. Once every asset has been distributed, every bill paid, and every return filed, close the trust bank account and retire the EIN. Keep the administration records for several years, because tax audits and beneficiary disputes can surface long after the trust is wound down.
Your Compensation and Personal Exposure
You are entitled to be paid. If the trust document sets a compensation formula, follow it. If the trust is silent, you are entitled to reasonable compensation under the circumstances.18California Legislative Information. California Code Probate Code 15681 – Compensation of Trustee What is reasonable depends on the size and complexity of the estate, the time you put in, and your expertise. Professional corporate trustees typically charge between 1% and 3% of trust assets annually. Individual family-member trustees often charge less. Keep time records; if a beneficiary challenges your fees, you will need to justify them.
Excessive compensation is itself a ground for removing a trustee. Others include breach of fiduciary duty, insolvency, failure to act when action is required, and hostility between co-trustees that impairs administration.19California Legislative Information. California Code PROB 15642 – Removal of Trustee A trustee personally at fault for losses to the trust can be held personally liable to make the beneficiaries whole.20Justia Law. California Code Probate Code 18000-18005 – Liability of Trustee to Third Persons The checklist above exists to keep you out of that territory.