QUICK OVERVIEW / TIMELINE OF TRUSTEE DUTIES

Trust Administration

The First and Most Important Step

Trust administration begins with a required probate code notice to all trust beneficiaries and
heirs of the settlors. California Probate Code Section 16061.7 states that such notice must be
sent within 60 days of the death of a settlor and allows the recipient of the notice to request a
copy of the trust. After receiving the mailed notice the recipient has 120 days from the date of
mailing to file a trust contest. If no contest is filed within a 120 days, then the notice recipient
may forfeit their right to file a contest. But if no notice is mailed, the statute of limitations in
which a trust contest could be filed is much greater, and could be up to at least of four years.

Second Step – Dealing with Real Property

An Affidavit of Death of Trustee and Consent of Successor Trustee should be recorded against
each real property held in the Living Trust. This Affidavit is recorded with a certified copy of the
death certificate. When it is recorded, it changes the title of the property from the trustee
(usually the settlor) who has died and into the names of the new trustee(s).

Third Step – Collecting the Other Assets

Once you have dealt with the real property, you will need to identify all of the other trust
assets, e.g. bank accounts and investment accounts, and have the title to those assets
transferred into our name as successor trustee. In order to accomplish this, you will first need
to obtain a federal tax identification number for the trust. It is essential that you obtain a
federal tax ID number for the accounts that are in the name of the trust so that any income
earned from those assets is reported correctly to the IRS.

Fourth Step – Ascertaining and Paying Debts & Taxes

Filing Tax form 706
The IRS requires that the federal estate tax Form 706 is filed within nine months of death. (This
is in addition to income tax return 1040 for the deceased for the year of his or her death and a
1041 tax return for the trust every year of its existence after the death of the original trustor.).
Once your attorney or tax professional has calculated any estate taxes owned, it is essential to
file the 706 tax form and pay the taxes within the allotted nine months to avoid any penalties
and interest. For a married couple, after the first death, there is generally no estate tax
payable, due to the unlimited marital deduction.

Fifth Step – The Accounting

You will need to:
• Keep track of all the trust money you are spending to wind up the decedent’s final
affairs
• Keep track of all deposits and disbursements from the trust
• Review the trust document to see what method of accounting is required

Sixth Step – Distribution

After all of assets have been collected, the debts paid, the tax returned filed and the tax
liabilities satisfied, the account prepared and rendered (if required), you will be in a position to
distribute the remaining trust assets. As with all other aspects of trust administration, the
terms of the trust document will dictate how the trust assets are to be distributed among the
trust beneficiaries.
Allocation and Distribution of Trust Assets
• Identifying the successor trustees
• Outlining the distribution provisions
• Reciting distributions of personal property already made
• Describing the funding and the values used for determining the distributions to subtrusts and to the beneficiaries
• Proposing the final distribution plan
• Obtaining consent from beneficiaries for final distribution and waivers of accounting, if
appropriate.