What to Do After a Trustee or Settlor Passes Away

When a trustee or settlor (the person who created the trust) passes away, it can be overwhelming for those left in charge. Whether you are the surviving spouse and co-settlor or the successor trustee, there are important legal and financial steps you must take to ensure the trust is properly administered. This guide outlines the key responsibilities based on your role.

If You Are the Surviving Spouse and Co-Settlor

If you and your spouse created a joint revocable living trust, you typically become the sole trustee upon your spouse’s passing. Here’s what you need to do:

1. Review the Trust Document

• Confirm whether the trust remains revocable or has become irrevocable upon your spouse’s death.

• If the trust has separate and marital property provisions, determine if a portion of the trust assets must be placed into an irrevocable bypass trust (also known as an A/B trust or credit shelter trust).

2. Obtain Death Certificates

• Order multiple certified copies of the death certificate from the funeral home or county recorder’s office.

• These will be required to update financial institutions, government agencies, and property records.

3. Notify Financial Institutions and Government Agencies

• Notify banks, investment firms, and insurance companies of the death.

• Contact the Social Security Administration to report the death and discuss survivor benefits.

• Update title and beneficiary designations where necessary.

4. Transfer Assets and Retitle Property

• If you are the sole beneficiary, you may need to update ownership on joint accounts, real estate, and other trust assets.

• If your spouse was the sole owner of any assets outside the trust, you may need to file a Spousal Property Petition to transfer ownership.

5. Review and Update Your Estate Plan

• If your trust was a joint trust, you may need to create a new revocable trust in your name.

• Update your will, power of attorney, and health care directive to reflect your new circumstances.

Key Takeaway: If you are the surviving spouse, your primary goal is to ensure a smooth transition of assets while reviewing whether any portions of the trust require separate administration.

If You Are the Successor Trustee

If you are named as the successor trustee, you are now responsible for administering the trust. This involves managing assets, settling debts, and distributing property to beneficiaries according to the trust’s terms.

1. Locate and Review the Trust Documents

• Obtain a certified copy of the trust and all amendments.

• Verify the specific instructions for asset distribution.

2. Obtain a Tax Identification Number (EIN) for the Trust

• If the trust has become irrevocable, it will need a new Tax Identification Number (EIN) from the IRS.

• This number will be used to open an estate or trust bank account and file tax returns.

3. Notify Beneficiaries and Heirs

• Under California law, you must send a Notice of Trust Administration to all trust beneficiaries and heirs within 60 days of the settlor’s death.

• This notice informs them of their rights and allows them to contest the trust if they choose.

4. Inventory and Manage Trust Assets

• Identify all bank accounts, real estate, investments, and personal property held in the trust.

• Obtain appraisals for real estate and other valuable assets.

• Maintain detailed records of trust income and expenses.

5. Pay Debts and Taxes

• Determine if the trust is responsible for any outstanding debts or final expenses.

• File the decedent’s final income tax return and any necessary trust tax returns.

6. Distribute Assets to Beneficiaries

• Once debts and taxes are settled, distribute assets according to the trust’s terms.

• Obtain signed receipts from beneficiaries to document asset transfers.

7. Close the Trust (If Applicable)

• If the trust only existed to distribute assets, it can be formally terminated after all obligations are met.

• File a final trust accounting if required by the trust document or beneficiaries.

Key Takeaway: As a successor trustee, your role is to administer the trust in compliance with California law, ensuring all debts are settled and assets are distributed properly.

Do You Need Help Administering a Trust?

Whether you are a surviving spouse navigating a joint trust or a successor trustee managing a complex estate, proper legal guidance can help prevent costly mistakes.

Our firm specializes in trust administration, estate planning, and probate matters. Contact us today to schedule a consultation and ensure your trust is handled correctly.