California Successor Trustee Checklist

Key Takeaways 

• A successor trustee is responsible for managing assets within the trust and fulfilling the wishes of the trust creator as laid out in the trust instrument.
• Some of the responsibilities of a successor trustee include locating documents related to the trust, managing property within the trust and keeping adequate records to account to the beneficiaries.
• Seeking the support of a trust administration attorney can help you better understand your responsibilities and provide guidance to ensure you are acting within them. 
• Our easy-to-reference checklist can help you understand your responsibilities and keep you on track to conduct a successful trust administration process.

Introduction

A successor trustee is the individual first in line to take over the administration of a trust when the initial trustee is no longer able or willing to serve their role (by death, incapacity or unwillingness). The successor trustee is expected to come into the role and handle all of the responsibilities to ensure the assets of the trust are carefully and reliably managed.

As they take over and step into the role as trustee, it’s crucial that the successor trustee is able to understand the full scope of their duties and responsibilities. The trustee role can be complicated and involve handling a lot of moving parts—the following successor trustee checklist will serve as a handy resource for trustees serving in their role to lay out their duties, keep track of their progress, and promote a smooth process.

What Does a Successor Trustee Do?

A successor trustee is the point person for administering the trust, managing its assets, and carrying out all the necessary responsibilities. A successor trustee is identified in a trust instrument and given the task of ensuring that the wishes of the trust creator, or settlor, are carefully carried out and is first in line if the original trustee cannot do so.

A successor trustee steps into a role when the original trustee identified must be replaced, either because they refused the role, are removed from the role, or are no longer able to fulfill the responsibilities of the role. 

Some of the general responsibilities and capabilities of a successor trustee include: 

• Understanding the terms laid out in the trust instrument and the trustor’s wishes
• Notifying interested parties of the trust administration process
• Gathering and inventorying all assets in the trust
• Managing trust property and investments
• Paying bills or taxes for existing trust property
• Preparing an Accounting 
• Distributing trust assets to beneficiaries and collecting receipts
• Prepare and file trust tax return(s)

A successor trustee’s responsibilities are wide ranging, as they may involve everything from taking care of trust property to ensuring the ownership of the trust’s assets are legally transferred to the appropriate beneficiaries.

Successor Trustee Step-by-Step Checklist

To fulfill their legal obligations after trustee succession, a successor trustee should be aware of the following steps in the trustee duties checklist.

1. Formally Accept the Role

The first step a successor trustee should take is to formally accept the role so that they can be appointed by the courts. If you were named a successor trustee in the trust instrument, then you should take immediate steps to prepare for your role. 

After you are initially notified of your position, you can take the following steps: 

• Ask any questions you have of the settlor
• Acquire and maintain a copy of the trust documents, including any and all amendments and restatements, for your records
• Ask the trust creator for a list of all assets and liabilities and confirm title to assets
• Research your responsibilities as a successor trustee and under what circumstances you may be called upon

After the grantor’s death, you should take the following steps:

• Accept the role with the court (if court supervised)
• Inform the grantor’s family and beneficiaries that you are the successor trustee
• Contact a trust administration attorney
• Seek the support of professionals like a CPA, financial advisors, or tax advisors

2. Locate Trust Documents and Other Personal Documents

The trust documents are crucial for laying out how property should be managed and how the wishes of the trust creator should be carried out. The trust instrument shouldlist all property that belongs to the trust, which beneficiaries should receive the property, and under what terms. You should also seek any other documents that may simplify the trust administration process.

Follow these steps to compile all the necessary documents related to the trust:

• Gather and review the trust instrument; this includes any amendments and restatements
• Familiarize yourself with the terms, conditions, and any special instructions laid out by the grantor in the trust
• Obtain the IRS EIN for trusts that are now considered irrevocable, if applicable, and not included in the trust documents
• Order several copies of the death certificate to present as needed
• Gather personal records like the grantor’s checkbooks, bank statements, and tax returns from the past three years
• If you are also the executor of the estate, locate the original will

3. Notify All Interested Parties of the Trustor’s Death

A trustee will need to notify all interested parties of the trustor’s death, their official appointment, and the beginning of the trust administration process. According to California Probate Code § 16061.7 and the Texas Estate Codes, this process must be done within 60 days after the death of the settlor or within 60 days after the date when a trustee assumes their powers. For institutions like the bank or the Social Security Administration, the trustee will need to present the death certificate 

The important actions under this step will include:

• Identify all  beneficiaries named in the trust
• Send a formal Notification letter to all beneficiaries and close relatives of the trustor as required by the probate code
• Send a copy of the trust instrument to all interested parties
• Present the death certificate to the bank, credit card companies, and any other applicable creditors
• If applicable, contact the Social Security Administration and Veterans Affairs offices
• Notify the California Department of Health and Franchise Tax Board of the trustor’s death
• Notify credit bureaus of the trustor’s death

4. Consolidate all Assets in the Trust

As the successor trustee, you will be responsible for keeping track of and monitoring all estate property identified in the trust. Important assets may include bank accounts, real property, vehicles, valuable artwork, and more. If you are unsure of where any of these assets are located, you may need to conduct more in-depth searches to ensure that they are managed as requested by the trust creator.

Steps involved in consolidating assets include:

• If necessary, search through the grantor’s mail, personal documents, or business records to identify the whereabouts of any property not immediately known
• Search through the grantor’s records to find the title or ownership documents of any property
• Identify all liabilities or debts related to the trust
• If a trust was revocable, submit claims to lenders or title companies to obtain ownership for each property under the trust

5. Manage and protect trust assets

Maintaining and protecting trust assets is a crucial part of the successor trustee’s role to ensure that the trust avoids financial losses and that all assets retain their value before they are transferred to beneficiaries. Irresponsible management of any trust assets can result in successor trustee removal, so it’s important to understand the full scope of these duties. 

Necessary steps involved in managing and protecting trust assets will include:

• Compile any necessary utility bills for properties and continue making monthly payments if necessary or terminate services
• Have all mail from the properties forwarded to you
• Cancel any credit cards, subscriptions, internet or television services
• Coordinate with the executor to enter any items excluded from the trust into probate
• Lodge the decedent’s original Will with the Probate Court in the county they died
• Obtain date of death appraisals for real estate property to determine the tax basis 
• If authorized by the trust, sell real estate property and reinvest the proceeds back into the trust if it’s beneficial for the trust or required by the trust instrument
• Notify beneficiaries of any transactions involving trust assets

6. Ensure proper insurance coverage

Insurance coverage is important for protecting and preserving any property under the umbrella of the trust. The trustor must ensure that properties are protected in the event of unforeseen circumstances as part of their duty. Insurance coverage may be necessary for real estate properties, vehicles, or other valuable personal belongings.

As you verify and ensure reliable insurance coverage, take the following steps:

• Verify that insurance policies are active for all properties to avoid gaps 
• Continue managing payments for any property or casualty insurance
• If applicable, specify to the insurance company that a property is unoccupied rather than vacant
• Maintain a record of insurance payments and statements

7. Monitoring and managing investment performance

Investment management is another important part of the trust administration process. After a grantor passes, investment accounts may continue to generate income. It’s up to the trustee to oversee and manage these accounts responsibly and minimize potential risks.

Successor trustees should take the following steps:

• Consult with the trust creator’s investment brokers
• Work closely with financial advisors and brokers to guide next steps
• Analyze current investment portfolio performance 
• Make responsible investments with trust assets where beneficial
• Understand the trust creator’s intentions for transferring ownership of these accounts

8. Handling tax obligations

Trusts are subject to taxes just like any other personal or business entity that facilitates transactions and generates an income. Tax obligations may include property taxes, capital gains taxes, and both state and federal income taxes. Failing to uphold these responsibilities by paying taxes in a timely manner may result in penalties or fees against the trust. 

Some of the responsibilities a trustee will have to carry out related to tax obligations will include: 

• File state and federal tax returns for the year in which the grantor passed
• Pay any necessary property taxes regarding assets in the trust
• Track any income generated by investments
• Maintain a clear accounting of all tax payments and transactions 

9. Keep detailed records and accounts

Maintaining detailed records and accounts of everything in the trust will be necessary for protecting assets in the trust and ensuring everything is accounted for. If the trust administration is court-supervised, the court will also require a record of the transactions involved in the trust administration process to formally close it out, so it’s important that this is well-maintained from the beginning to the end of your appointment.

In this step, you will need to consider the following aspects in your checklist:

• Keep a detailed accounting of all transactions made involving trust assets
• Hold onto any receipts gathered from trust transactions
• Maintain copies of investment account statements
• Provide an ongoing accounting to beneficiaries as requested or at least yearly
• Keep track of your time in a separate log to account for trustee’s fees
• Keep a running balance sheet of the values in the trust bank, investment, or life insurance accounts

10. Prepare a trust administration plan

A successor trustee should prepare a trust administration plan to guide the distribution of the trust’s assets to the identified beneficiaries and allow for a seamless transition based on the terms of the trust instrument. The process may look different depending on the trust, its assets, and the trustor’s wishes.

However, preparing any trust administration plan typically entails the following steps: 

• Notify beneficiaries of proposed actions and transactions
• Lay out a timeline of the trust process and what actions will need to be taken throughout
• Regularly updating interested parties in the trust of important transactions
• Create a budget for the trust, highlighting trust income and expenses
• Track the flow of finances during the process with a careful accounting
• Consult professionals, like financial advisors, a CPA, or an attorney, for guidance as needed

11. Distribute trust assets to beneficiaries

One of the final and most crucial steps in the trust administration is the transfer of assets from the trust to the identified beneficiaries. With a clear understanding of the trust instrument and the trust creator’s wishes, you can begin to transfer assets to the proper parties. 

In this process, you should: 

• Consult your attorney regarding your trust administration plan for any additional guidance.
• Seek approval from the court to distribute assets to beneficiaries (if administration is court-supervised)
• Carefully follow the terms of the trust instrument 
• Maintain an accounting of all trust assets and transactions
• Prepare and send receipts of final distribution to all beneficiaries
• Ensure that ownership of all assets is legally transferred to the respective beneficiaries 
• Set up any subtrusts if required by the trust
• Mediate any possible disputes amongst beneficiaries
• Account for the payout to you as the trustee described in the trust document

12. Finalizing the trust administration and closing the trust

After fulfilling all of your duties as a successor trustee and carrying out all the wishes laid out in the trust instrument, you can take the final steps to close the trust. This step requires maintaining well-organized documentation that outlines all actions you took as the trustee to verify that you diligently performed your role in line with the settlor’s wishes.

When finalizing the process, consider the following steps:

• Review the trust instrument to ensure that all aspects have been executed
• Compile all receipts and documentation from estate transactions 
• Prepare a final accounting of all transactions, detailing all financial activities, transactions, and distributions
• Consult legal advisors to ensure that all steps have been carried out accurately
• Provide communication to beneficiaries about the closing of the trust

Is It Mandatory To Serve as a Successor Trustee? 

No, it is not mandatory to serve as a successor trustee, and you have the right to refuse the role if you are identified. If you choose not to act as a successor trustee, then you should send a notarized letter to the lawyer of the trust and the current trustee stating that you refuse the appointment. 

As you consider accepting the appointment, it’s important to weigh the pros and cons. If you accept, you are able to provide a service to your loved one’s legacy by carrying out their wishes. The trust will also likely designate a payment for your services. However, serving as a successor trustee involves considerable responsibility and can be very time-consuming, so it is not a role you should take lightly. 

Get Support in Your Role from RMO Lawyers

Successor trustees have many responsibilities to follow to uphold their duties and ensure the proper administration of the trust—the above trustee duties checklist will help you understand and keep track of your key responsibilities, but it is just a start. 

There is no substitute for sound legal advice from an experienced trust administration attorney to guide you along the way. Our attorneys at RMO Lawyers have decades of experience in trust administration and litigation, and we will ensure you understand your role and the responsibilities that come along with it.

Schedule a free consultation with RMO Lawyers for dedicated legal support in your role.