Trust Administration: Steps to Protect the Successor Trustee
Duties and responsibilities of successor trustee for an effective trust administration and avoidance of personal liability.
Notice to BeneficiariesCalifornia Probate Code requires the successor trustee to provide a written notice to the beneficiaries of the trust and the heirs of the decedent. This notice must be provided within 60 days from the date of death. The notice informs the beneficiaries of the successor trustee's existence, the contact information for the successor trustee, the time limit to challenge the trust, and tells them on how to obtain a copy of the living trust.
Note that if as a successor trustee you fail to serve the notification, you would be responsible for all damages, attorney's fees, and other costs caused by such failure.
Tax Identification NumberThe successor trustee must obtain a Federal Tax Identification Number from the Internal Revenue Service. After the death of the grantor, the estate of the decedent becomes a separate taxable entity. State and federal tax returns must be filed until all assets of the estate are distributed. If the successor trustee distributes the assets before all taxes are paid, the successor trustee may be personally liable for the decedent's taxes due.
Change of Ownership DocumentsThe successor trustee needs to file the change of ownership statement with the office of the County Assessor and the claim for reassessment exclusion for transfer between parent and child. The claim for exclusion part is not always necessary and only applies to the property transfers between parents and children and/or grandparents and grandchildren.
The successor trustee also files an affidavit of death of trustee in the county where the real estate property is located. This document provides the successor trustee the authority to sell or transfer the decedent's real estate.
Trust Accounting and Communication with the BeneficiariesThe successor trustee has an ongoing duty to communicate with the beneficiaries of the trust, keep trust accounting ,and provide financial reports to the beneficiaries of the trust. An accounting is needed form the date of death to the final distribution of the trust assets. It must include the receipts and disbursements of principal and income, a statement of assets and liabilities of the trust, information regarding the compensation of the trustee and any agents hired by the trustee, and other information required by the Probate Code.