If you’ve recently lost a loved one and discovered you’ve been named as Trustee of their trust, you may be wondering what exactly your responsibilities are and whether trust administration is really as complicated as people say.
Many beneficiaries and new Trustees assume that trust administration simply means:
- notifying a few people,
- paying a few bills,
- and writing checks to the heirs.
But in California, trust administration is far more involved than most people expect.
There are strict legal requirements, tax obligations, timelines, and fiduciary duties that must be followed precisely. And if something is missed or handled incorrectly, the Trustee, not the estate, can be held personally liable.
The Reality: Trust Administration Is a Legal Process, Not a Simple Paperwork Task
In California, a Trustee steps into a fiduciary role the moment the Grantor passes away. This means you are legally obligated to:
- Act in the best interests of all beneficiaries
- Follow the trust terms exactly
- Remain impartial even when there is family conflict
- Keep detailed records of every financial transaction
- Avoid any action that could be considered self-dealing
- Comply with state-mandated notices, Federal and State tax requirements, and other deadlines
Many new Trustees don’t realize that failing to follow these fiduciary obligations, even accidentally, can result in:
- personal liability,
- civil penalties,
- IRS or FTB issues,
- lawsuits brought by beneficiaries.
This is why trust administration is not something you “figure out as you go.” It requires precise legal compliance, documentation, coordination with several professionals, and legal advice.
Strict Deadlines Make the Process Even More Complicated
California imposes numerous trust administration deadlines, some as short as 60 days. Missing just one can cause serious consequences, such as:
- invalidating beneficiary notices,
- opening the trust to legal challenges,
- creating tax penalties,
- slowing down property transfers or causing reassessments,
- or putting the Trustee at risk of being sued.
Most people don’t know all of these deadlines exist, or how to meet them, which is one of the biggest reasons Trustees unintentionally make mistakes. There are many deadlines that most estates share in common but each case is unique, so some things may required in one estate in one estate but not another.
Why Doing It on Your Own Is Risky
Even well-meaning Trustees can run into trouble because they underestimate the legal complexity of trust administration. Common risks include:
1. Personal Liability
If you make a distribution too early, make a tax mistake, or fail to document actions properly, beneficiaries can hold you personally responsible in court.
2. Missed Deadlines
California Probate Code includes several mandatory notices and timeframes. These are not optional and missing one cause legal liability.
3. Tax Errors
Final personal returns, trust returns, and sometimes estate tax returns must be handled correctly, or the Trustee may be exposed to later unexpected tax issues or penalties.
4. Beneficiary Complaints or Disputes
Even if your intentions are good, poor communication or improper recordkeeping can lead to misunderstandings, accusations, or court action.
5. Hidden Issues in the Trust Document
Many trusts contain tax clauses, specific bequests, subtrust allocations, formula provisions, or marital trust terms that must be legally interpreted correctly after death.
The bottom line is that Trustees are responsible for everything that happens during administration, even if they didn’t know a requirement existed.
Why Marital Trusts Require Administration After the First Spouse Dies
A major misconception is that families only need to worry about trust administration once both spouses have passed away.
This is not the case.
If the trust contains marital trust provisions, such as an A/B Trust, Survivor’s Trust, Bypass Trust, or Disclaimer Trust, then legal administration is required immediately after the first spouse dies.
Failing to do this can:
- Cause future estate tax issues
- Prevent proper funding of subtrusts legally mandated in the trust.
- Compromise asset protection features
- Invalidate intended tax planning
- Create significant problems for the surviving spouse and beneficiaries later
We regularly assist families who waited until the second spouse passed away, only to find out that required steps were missed years earlier, steps that are very difficult to correct or can no longer be corrected (sometimes causing a lot of stress or even litigation that the trustee has to deal with).
If your trust has a marital formula or any kind of split-trust structure, it is essential to work with an experienced estate attorney soon after the first spouse’s death.
A Real-Life Example: How Easy It Is to Make a Costly Mistake
One of our clients was named Trustee of her parents’ trust. The trust included several pieces of real estate and significant investment accounts. Believing she could manage things herself, she skipped required notices, failed to obtain date-of-death valuations, and made early distributions.
When tax time came, she discovered there were substantial taxes and expenses owed, but most of the funds had already been distributed.
Our office did the following to assist our client:
- Corrected filings
- Coordinated valuations and tax returns
- Negotiated repayments from beneficiaries
- Helped her avoid personal liability and a potential lawsuit
This situation is far more common than most people realize and is a perfect example of how easy it is to make costly mistakes without legal representation.
How We Help Trustees Navigate the Process with Confidence
At Geiger Law Office, we guide Trustees through every step of trust administration. We help ensure:
- All legal notices are timely drafted and sent to the appropriate parties
- Deadlines are met
- Valuations and appraisals are coordinated and documented
- The right tax returns are coordinated with a skilled CPA
- Trust accountings are accurate, compliant and timely served on beneficiaries (when required).
- To help protect you as Trustee from liability
- The trust is administered efficiently, legally and correctly
Our goal is to remove the stress from your shoulders so you can focus on your family and your healing.
Next Step: Schedule a Strategic Trust Administration Planning Meeting
If you're a Successor Trustee or if your spouse has recently passed away and your trust includes marital provisions, now is the time to get clarity and protect yourself.
During your Strategic Planning Meeting, we will:
- Review your trust documents
- Explain your legal duties
- Identify what needs to happen next
- Create a customized timeline and roadmap for the administration of the trust
To schedule your Strategic Planning meeting, contact our Intake Department by calling (760) 448-2220 or visit our website to Submit an inquiry here.
As our gift, you’ll also receive a complimentary copy of The Trustee’s Guide to Trust Administration in California, by Brenda Geiger, J.D. and our video Masterclass on Trust Administration after booking an appointment with one of our attorneys.
Free Zoom Webinar on December 9th
We are hosting a free live Zoom webinar on December 9th at 12:30 p.m. PST, where you’ll learn:
- What really happens after someone dies
- What California Trustees are legally responsible for
- The top mistakes to avoid
- How to protect yourself from liability
- Why marital trusts require immediate attention after the first spouse dies
