Your duties as a Successor Trustee in California

You may have recently experienced the loss of a loved one, and along with dealing with the emotional ups and downs that come with that event, you have now been given the honor of managing their–now irrevocable–trust.

Trying to deal with both of these events is no small feat, notwithstanding dealing with the emotions that accompany these proceedings.

Luckily, since your loved one created a living trust through their estate plan, their assets and other properties will likely be managed according to their wishes, whether they are incapacitated or deceased.

A living trust is a document that sets out conditions, that if met, will assign property and asset management to a third-party (known as the trustee).

Most often, these conditions include the trustor (the person who created the trust) passing away or becoming incapacitated (unable to manage their own personal care or matters).

Upon the trust’s activation, the trustee is legally obligated to act in the best interests of the person who created the trust and the beneficiaries of said trust, as well as fulfill the terms of the trust to the greatest extent possible.

To be named the successor trustee of a loved one’s trust is an honorable title. In short, it entails that you are the third party the trustor has entrusted their property and assets to in the event they pass away or become incapacitated.

As the successor trustee, you are responsible for administering the trust’s assets and property within the bounds of the trust’s terms and conditions. As quickly mentioned above, you have a fiduciary duty to act in the best interests of the beneficiaries of the trust; which means managing the trust’s assets as prudently as possible–among other things.

Generally, in the state of California, the first step for a successor trustee to take is to put the title of all the trustor’s property into their name as the successor trustee.

For this to happen, you will need the Affidavit of Successor Trustee in California, a document that proves you are indeed the named successor trustee. Along with executing the document itself, this typically requires bringing proof of incapacitation of the trustor (usually a death certificate).

Given that there are many complex steps to go through once you have been named a successor trustee, it is important to understand your core duties that will guide all of your actions following your appointment.

Duty to be loyal: As the successor trustee, you have an obligation to the beneficiaries of the trust, which means you must act in their best interest; not your own.

Duty to be prudent: Since you are managing assets that were (or still are) the property of another, you must act responsibly with their assets. This means acting as a “reasonable person” would, given the circumstances.

Duty pertaining to investments: Similar to the above two duties, the successor trustee is required to review the trust’s investments and assets to ensure that these financial plans line up with the overall purpose of the trust, as well as its terms.

Duty regarding the distribution of assets: As the person managing the assets and property of the trust, you are required to follow the distribution terms of the trust, which may follow many different formulas. You should act reasonably and prudent while thinking of the interests of the beneficiaries when making a decision regarding distribution that is not clearly outlined in the trust.

Duty to render accounts: The successor trustee is also required to ensure that all of the trust’s annual federal or state tax filings are completed, as well as any other filing requirements.

Duty to separate property: Finally, you are not permitted to have any of the trust’s property put into your personal name. It must be kept separate.

Now that we have overviewed the core duties of a successor trustee, here is a quick checklist to show you how these duties would be followed responsibly:

1. Obtain a copy of the trust agreement and review it.
2. Take inventory of all the trust assets.
3. Notify all interested parties of your appointment, such as banks, agencies, family members, beneficiaries, and others.
4. If the deceased was collecting income from pension plans, insurance policies, or any other benefits, they need to be canceled. Review any policies for listed beneficiaries to ensure their interests are met, and ensure that these distributions are remitted before the end of the year of your appointment.
5. Obtain a federal tax number.
6. Execute and file the Affidavit of Successor Trustee.
7. Begin distributing the assets, property, and other funds as per the trust.
8. If the trustor has passed away, file their will with the Surrogate’s Court.
9. Take note of what bills and liabilities need to be paid, and how.
10. Cancel all credit cards of the trustor, and ensure their medical bills have been paid.
11. Determine if further assistance is required from professionals.
12. Once you have begun distributing assets according to the trust, ensure you follow the trust’s terms and conditions as well as state laws. Additionally, continue to keep the beneficiaries of the trust well informed of how these assets are being distributed.

While the above is not an exhausting checklist, it is a strong place to start. Below are some points to note in each possible scenario that led to the activation of the living trust.

If the Grantor Passes Away

As soon as the grantor or trustor of the trust passes away, their trust becomes irrevocable, and cannot be adjusted.

In addition to following the above duties and responsibilities, you will be required to notify any legal heirs of the decedent and any beneficiaries within 60 days of the trust becoming irrevocable. This proceeding is according to California Probate Code Section 16061.7.

If the Grantor is Incapacitated

In the event the trustor/grantor is alive but incapacitated, you will need to provide proof of their incapacitation to manage their trust. Below are the two most important provisions and documents to be aware of.

As per California Probate Code Section 18100.5, the trustee must present a Certification of Trust Form to establish the existence and terms of the trust, if the actual trust instrument cannot be presented.

Furthermore, pursuant to California Probate Code Section 18105 the successor trustee is required to fill out an Affidavit of Change of Trustee Form if there is any real property that is affected by a change of trustee. When the grantor/trustor becomes incapacitated, this will most certainly be the case.

Trust Experts From ClearEstate Can Help

With all the above legal hoops to jump through, along with managing the loss or incapacitation of a loved one, it can be extremely overwhelming to manage a trust on your own. Let our trust experts help give you the guidance you need at a cost you can afford. Contact us today.