Trust Administration

Serving as a successor trustee is an honor, but it’s also a legal responsibility with strict rules. Missteps can expose the trustee to liability or can simply delay and deplete distributions. At Wright, Finlay & Zak, our Trusts & Estates Practice Group guides trustees through each phase of administration with structure and clarity.

We guide trustees (and successor trustees) through every stage of administration, ensuring they comply fully with their legal and fiduciary obligations, and getting assets out to their intended recipients.

Initial Steps After the Settlor’s Death

Administration begins immediately upon the death of the settlor (or surviving settlor in a joint trust). Early decisions often shape the tone and efficiency of the entire process.

Typical initial tasks include:

1. Locating and reviewing the trust instrument and amendments
2. Determining the acting successor trustee
3. Securing and preserving trust assets
4. Notifying banks, credit cards, and investment institutions
5. Obtaining certified copies of the death certificate
6. Applying for an EIN

We assist trustees in understanding their fiduciary duties from the outset, helping prevent common early errors that can create unnecessary conflict later.

Statutory Notice Requirements

California law imposes mandatory notice obligations on trustees. Under Probate Code section 16061.7, trustees must provide formal written notice to beneficiaries and heirs, triggering specific timelines for contest rights. Proper service and documentation are essential.

We prepare and coordinate statutory notices to ensure compliance and reduce the risk of procedural challenges.

Marshaling and Valuing Trust Assets

A trustee must identify, collect, and inventory all trust assets.

This often involves:

1. Confirming title to real property

2. Retitling financial accounts (into the irrevocable trust)

3. Coordinating with financial institutions

4. Securing personal property

5. Obtaining date-of-death valuations

We assist trustees in organizing asset information, coordinating with institutions, and establishing accurate values for tax and accounting purposes.

Creditor Claims and Debt Management

Even though a trust administration is not a formal probate proceeding, creditor issues still require careful handling.

Trustees must:

• Identify known debts
• Evaluate potential creditor claims
• Determine whether to provide notice to creditors
• Decide whether to open a probate solely to limit creditor exposure

We advise trustees on strategies to manage debt exposure while balancing cost and efficiency, including when a probate may be strategically appropriate.

Ongoing Fiduciary Duties and Recordkeeping

Trustees owe duties of loyalty, impartiality, and prudence. These duties continue throughout administration. Among many others, this includes managing investments responsibly, preserving real property, avoiding self-dealing, and maintaining detailed financial records.

We counsel trustees on fiduciary standards and help implement systems that support transparency and defensibility.

Accountings and Beneficiary Communication

Transparency reduces conflict. Trustees are often required to provide accountings to beneficiaries detailing receipts, disbursements, and distributions. Even when a formal accounting is waived, proper reporting is essential.

We prepare formal and informal trust accountings and assist trustees in communicating clearly with beneficiaries to minimize disputes and maintain trust.

Tax Compliance

Trust administration frequently involves income tax and, in some cases, estate tax considerations.

Trustees may need to:

• File final individual income tax returns
• File fiduciary income tax returns (Form 1041)
• Address property tax reassessment issues
• Evaluate estate tax exposure

We coordinate with tax professionals and advise on the legal framework surrounding these obligations.

Real Property Transfers and Sales

Trust-owned real estate often requires careful coordination. A trustee may need to:

• Prepare and record affidavits of death of trustee
• Repair, improve, insure, and preserve the house or building
• Manage tenants or sell the property
• Transfer title to beneficiaries

Navigating property tax implications under Proposition 19

We assist trustees with documentation, title coordination, and risk mitigation throughout the process.

Distributions and Closing Administration

Final distribution requires confirmation that all obligations have been satisfied.

Before distributing assets, trustees should confirm debts and expenses are resolved, ensure taxes are filed and paid, and provide required accountings to beneficiaries.

We guide trustees through structured final distributions designed to reduce post-distribution liability and bring administration to a proper close.

Whether you are just getting started or winding things up, we can help at any or every stage to ensure you get the trust administration process done correctly the first time.