Tips for Successor Trustees

Under California law, there are certain steps that a successor trustee must take in order to keep himself out of legal trouble. A recent article discusses several of these steps.

First, in accordance with California Probate Code Section 16061.7, a successor trustee must provide written notice of their succession within 60 days of the death of the initial trustee. If a successor trustee fails to make such notice, they will be held responsible for any damages, fees, or costs that the failure may incur.

Next, successor trustees must complete a Form SS-4. Through this form, a successor trustee can obtain a Federal Tax Identification Number in order to file income tax returns. This is important because, after the initial trustee dies, his or her estate will become a separate taxable entity.

Successors must also file a Preliminary Change of Ownership Report form with the County Recorder where the estate is located. By putting the appropriate County on notice of the change in ownership of the real property associated with the trust, the successor trustee is able to avoid potential personal liability for assessed property taxes.

A successor trustee must also file income tax returns, protect the tax base of any property in the estate, transfer property as necessary, account, communicate, and finally close the account when appropriate.

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