Essential Checklist for Trust Administration in California

Structure is Critical

When managing a trust in California, whether due to the death or incapacity of the trustee, it’s crucial to adhere to a structured process. This blog post provides an overview of that process, highlighting the critical steps involved in trust administration.

 Understanding Trust Administration

Trust administration is a systematic approach, generally starting from the trustee’s cessation due to death or incapacity. It involves several key tasks such as identifying trust property, taking control, managing the assets, and eventually distributing them to the beneficiaries.

 Why Use a Checklist?

Just like pilots use checklists to ensure safety and efficiency, using a checklist for trust administration can prevent crucial oversights. The process can be overwhelming, especially for someone who is not a professional trustee. A detailed checklist ensures that every step is completed correctly, which is essential for both legal compliance and the peace of mind for all parties involved.

 Detailed Trust Administration Checklist

Here is a checklist of things the trustee must do in a typical California trust administration:

– Order ten death certificates.

• – Secure the living trust and the original will.
• – Get the name, address, phone, and email for each beneficiary and heir.
• – Contact the decedent’s financial advisor and accountant.
• – Determine whether you should hire an attorney to help you with the trust administration.
• – Lodge the original will with the Probate Court.
• – Submit Notice of Death to the California Department of Health Care Services.
• – Send Probate Code Section 16061.7 Notice to the trust beneficiaries and heirs.
• – Get a Tax Identification Number (EIN) from the IRS for the trust.
• – Prepare a Certification of Trust with the EIN.
• – Identify the decedent’s assets and values and determine how each asset is titled.
• – Give the Certification of Trust to banks and financial institutions for them to add your name as trustee of the trust accounts with the EIN.
• – Open a checking account in the name of the trust with EIN naming you as trustee.
• – Identify the beneficiaries of any retirement plans.
• – Keep a spreadsheet of all expenses incurred during the trust administration.
• – Determine whether all the probatable assets are titled in the living trust.
• – If not, determine whether you will need to file a Heggstad petition with the probate court.
• – Determine whether you should liquidate the brokerage accounts, and if so, transfer the funds to the new trust bank account.
• – Get an appraisal of real property unless you intend to sell right away.
• – If you intend to sell the home, get the home ready for sale.
• – Determine how to distribute and dispose of the decedent’s personal property.
• – Determine if and when a preliminary distribution can be made to the beneficiaries.
• – Determine the date of death value of the assets to establish the step-up tax basis.
• – Determine whether a form 706 estate tax return should be filed.
• – If you decide to keep the family home, think through the California Proposition 19 issues affecting the property tax.
• – Record Affidavit Death of Trustee for each real property.
• – File a Change in Ownership Report with the County Assessor.
• – If the decedent’s children will keep the home, file Claim for Reassessment Exclusion for Transfer between Parent and Child.
• – Determine how much money to reserve in the trust bank account for future bills and expenses including taxes and tax preparation costs.
• – Provide the beneficiaries with a trust accounting.
• – Determine if a waiver of the 120-day period to contest the trust should be sent to the beneficiaries.
• – Make the primary distributions to the beneficiaries.
• – File the decedent’s final form 1040 personal tax return.
• – File the form 1041 fiduciary tax return.

 Conclusion

Trust administration is a meticulous process that requires attention to detail and an understanding of legal and financial principles. By following a comprehensive checklist and possibly seeking professional help, trustees can fulfill their duties effectively, ensuring that the trust is administered smoothly and to the benefit of all beneficiaries.

 Need Professional Guidance?

If you have any questions about trust administration or need assistance managing the responsibilities that come with being a trustee, do not hesitate to reach out. Call us at (949) 334-7823 to schedule a confidential consultation. Let us help you ensure that the trust administration process is handled proficiently and with the utmost care for all involved.