How to Administer a California Living Trust

By Beverly Bird

Administering a living or “inter vivos “ trust in California is much like probating a will. While its grantor or creator is alive, he transfers his assets into it. He can manage those assets or even liquidate the trust entirely, making it revocable. When he dies, his living trust becomes irrevocable, and the trust takes over ownership of the assets contained in it. Assets in the living trust don’t have to pass through probate because the trust itself did not die. The steps of administering the estate are much the same as when bequests are made through a will, but the court generally does not oversee the process.

Step 1

Contact the probate court in the deceased’s county. Under legislation passed in 1997, California requires that you give notice to the trust’s beneficiaries and the decedent’s heirs that the trust has become irrevocable upon the original trustee's death. A particular form is required for this notice, which you can get from the probate court. Heirs and beneficiaries have 120 days to contest the terms of the trust under California law.

Step 2

Identify the decedent’s assets, both those with which he funded his trust and any he may have neglected to transfer into the trust. If he made a pour-over will, directing that assets outside his trust move into it at his death, California requires that you submit it for probate so his trust includes all his assets.

Protect your loved ones. Start My Estate Plan

Step 3

Arrange for appraisals of all assets of significant value. This is important both for tax purposes and for distribution of assets to beneficiaries. If the decedent left bequests in percentages, such as half to each of his two children, values must be determined so each beneficiary receives property of equal worth.

Step 4

Transfer title of the trust’s assets from the name of the trust into your name as successor trustee. Under California law, you must have ownership to eventually transfer the assets to the trust’s beneficiaries.

Step 5

Take possession of the decedent’s mail by collecting it from his residence and submitting a change-of-address form at the post office. His mail will help you identify his debts. California probate law does not require that a successor trustee notify the decedent's creditors of his death, but it can hold you personally liable for non-payment under some circumstances. Speak with an attorney about safeguarding against this.

Step 6

Contact the Internal Revenue Service to get a tax identification number for the trust. Prior to his death, the decedent’s Social Security number was associated with his trust, so you must change this before you can pay taxes on behalf of the trust. Use the new TIN for both IRS and California returns.

Step 7

File California and federal personal income tax returns for the decedent for his last year of life. You must also file fiduciary income tax returns for the trust, if it brings in any income after the decedent’s death, and a federal estate tax return on the value of the decedent’s assets, if they exceed the exemption amount in the year of his death. You are not required to file a California estate tax return.

Step 8

Contact an attorney to figure out how much you may pay yourself from the trust for your services as successor trustee. Under California law, you may be entitled to between 1 and 1.5 percent of the trust’s value for your services, depending on the terms of the trust documents and other factors.

Step 9

Make distributions to the trust’s beneficiaries after you’ve paid the decedent’s debts and taxes. This might involve establishing sub-trusts to hold assets not distributable to minors until they reach the age of majority or to accommodate other terms of the trust documents.

Protect your loved ones. Start My Estate Plan
How to Distribute the Assets of a Living Trust After Death

References

Related articles

How to Replace a Trustee of a California Living Trust

A living trust is a revocable trust created during its creator's lifetime. The creator is also the trustee, and he can tweak its terms any time he likes. He can also name another trustee, if he wishes, and remove that trustee at any time. When the creator of the trust dies, however, his trust becomes irrevocable. This shifts the power to his successor trustee, the individual he named to take over for him after his death. Under some circumstances, California law allows the decedent's beneficiaries to remove the named successor trustee and nominate someone else to serve instead.

What Do You Do When the Owner of a Living Trust Dies?

A living trust is a legal document drawn up before an individual’s death. The owner of a trust may place assets in the trust while he is alive and use the trust to dictate how those assets will be handled both before and after his death. A living trust is much more difficult to contest than a will, and it is not subject to probate, so distribution of assets is handled quickly. The trust owner names a successor trustee to administer the trust after his death. If you have been named a successor trustee, it will be your job to follow the instructions outlined in the trust.

How to Revoke a Living Trust

If your trust is revocable, you have the right to amend it at will. However, sometimes the changes might be so all-encompassing that it’s easier to “erase” your trust and start over. In this case, you also have the right to revoke it. The process isn't complicated, but you have to do something with the assets you placed into it.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Is a Living Trust Liable or Subject to Probate?

A living trust holds assets that are managed by a trustee for intended beneficiaries. Also called a revocable trust, it ...

Laws on the Responsibilities for the Deceased in Massachusetts

When someone names you as executor in his will, you have a legal obligation to the decedent’s beneficiaries to handle ...

The Statute of Limitations for Contesting Trusts

Living trusts can go a long way toward eliminating the hassles involved with settling your estate. If you create one, ...

Responsibilities of a Successor Trustee Upon the Trustees' Deaths

Initially, a successor trustee's job is one of waiting in the wings. As the name of the position suggests, this ...

Browse by category
Ready to Begin? GET STARTED