Trust Administration: First steps to Administer a House as Successor Trustee

When a successor trustee assumes their position, they should turn their urgent attention to any real property owned by the decedent. The property should be inspected, secured, and insured. Formal documents should recorded and mailed to the county to confirm the death of the initial trustee. Unless the trust requires the property to be held, the property should be distributed as soon as possible to avoid ongoing liability.

Send Trustee Notification

The trustee's first task should be to issue a notification pursuant to Probate Code section 16061.7. That notice gives the trust beneficiaries and heirs of the decedent a short 120-day statute of limitations to contest the trust. Some trust transactions will be conditioned upon the expiration of that statute of limitations.

If you suspect that anyone may contest the validity of the trust, have their notice delivered by certified mail with a return receipt. Service is effective upon mailing, but the return receipt can be critical evidence to cut off late filings.

Inspect, Secure, Insure

As soon as practical, the successor trustee should make a physical inspection of the property. Check for any obvious repairs that may need to be completed, take an initial inventory of the possessions left in the house. Remove valuables and critical documents. Check all the doors and locks. Consider re-keying the property so ensure that you are the only one who has access. Check for current insurance, or if you cannot find proof of insurance, get insurance in place right away. If the home still has a mortgage, contact the mortgage company, who may have records regarding current insurance.

Give formal notice

Two documents should be completed as soon as possible.

First the successor trustee should sign and record an "affidavit of death of trustee." That affidavit confirms that the previous trustee has died and that the new trustee is the legal owner of the property. The affidavit gives the successor trustee the right to act in all ways as the owner of the property, including the right to sell.

Second, the successor trustee should issue a "notice of death" to the county where the property is located. Each county assessor has their own form of notice that you can find on the assessor's website. The notice of death gives notice to the assessor's office that previous owner is dead, and triggers an evaluation of whether the property will be reassessed. It can be tempting to put off this notice, in the hopes of delaying reassessment, but that strategy risks hefty property tax penalties that can be recovered years later.

Distribution

Depending on the terms of the trust, it is generally advisable for the successor trustee to administer the trust and distribute the property as soon as possible.

Delaying distribution invites danger. If beneficiaries die before the trust is administered, making distributions to their rightful heirs can be complex, taking up years of time and legal expenses. Delay also gives people with potentially conflicting claims to the property more time to assert themselves.

If the trust calls for the property to be sold and distributed, then that process should happen as soon as possible. Sale and distribution within 1 year of the decedent's death help ensure that the trust and beneficiaries face minimal tax consequences. If the property is held for more than 1 year, tax may be owed on the post-death change in value.

If the trust calls for in-kind distribution, then it is appropriate to give the beneficiaries some time to coordinate how to manage the property, post-distribution. But waiting more than a few months should be discouraged. The property should be granted from the successor trustee to the beneficiaries as soon as practical, so conclude the trust and relief the trustee from potential liability.

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Contact Law Office of Ravi Patel if you need assistance with a trust administration. Book an appointment below or call 510-443-0443. Serving all of the Bay Area, including Oakland, San Francisco, San Jose, San Mateo, Contra Costa, Richmond, Marin, Mendocino, Napa, and Sonoma.