Settling a living trust in California is a multistep process that requires strong organizational skills, effective written and oral communication and comprehensive financial planning skills. California trust laws are very specific in terms of how a trustee must notify beneficiaries of administration and the steps that must be taken to settle a trust and distribute trust property.
Provide written notification. California law requires a trustee to give beneficiaries of a trust written notice of administration upon a settler’s death. Beneficiaries of the trust have 120 days from receipt of the notification to contest the trust in probate court.
Hire a private asset search firm or recover trust property on your own. Search the settler’s home files, mail, lock boxes and home safes. Collect any financial account records, dividend checks and income tax returns that you recover. Such documents may help to identify hidden or undisclosed assets. Recover checkbooks, insurance policies and collectibles from the settler’s home and secure the items in a safe or other secure location.
Increase the trust’s earning potential. For example, establish interest-bearing accounts at local banks, mortgage real estate property and sell stocks and bonds.
Hire an appraiser. Have an appraiser appraise real estate property, including a primary, vacation and investment properties. Keep the appraiser’s report in a trust portfolio until tax time.
File state and federal income tax returns. Consult a tax attorney in your state to find out which tax bracket your trust falls under. Federal tax information is available on the IRS website (see Resources).
Create a filing system. File documents by date, categorize receipts and itemize profits and losses. Losses include wages paid to lawyers and accountants.
Distribute trust property while minimizing taxes for the trust and beneficiaries of the trust.
Good record-keeping is key to settling a living trust without error and unnecessary delays.