Trust administration after death

When a trust creator (grantor/settlor/trustor) dies, the revocable living trust becomes irrevocable, and the named successor trustee takes over administration. Unlike probate, trust administration is a private process that does not require court supervision.

30 steps across 6 sections

1. Phase 1: Immediate Actions (Days 1-30)

  • Locate and review the trust document (and any amendments). Understand the distribution terms, trustee powers, and specific instructions.
  • Obtain multiple certified death certificates (10-15 copies). Financial institutions and government agencies require originals.
  • Secure all trust assets: Lock the home, secure vehicles, safeguard valuables, maintain insurance coverage.
  • Manage urgent expenses: Pay mortgage, utilities, insurance, and property taxes to preserve trust assets.
  • Consult a trust administration attorney to understand your duties and state-specific requirements.
  • Do NOT distribute any assets yet — you need to inventory, value, pay debts, and file taxes first.

2. Phase 2: Notification (Weeks 2-8)

  • Notify all trust beneficiaries in writing. Many states require formal notification within 30-60 days of the grantor's death (e.g., California Probate Code Section 16061.7 requires 60 days).
  • Notify the grantor's heirs at law (people who would inherit under intestacy, even if they are not trust beneficiaries) — required in many states.
  • Provide a copy of the trust (or relevant portions) to beneficiaries if requested or required by state law.
  • Notify relevant institutions: Banks, brokerages, insurance companies, Social Security Administration, pension administrators.

3. Phase 3: Tax Identification and Valuation (Months 1-3)

  • Obtain a Tax Identification Number (TIN/EIN) from the IRS (Form SS-4). Once the grantor dies, the trust can no longer use the grantor's Social Security number — it needs its own EIN.
  • Open a trust bank account in the trust's name using the new EIN for managing income and expenses.
  • Inventory all trust assets: Real estate, bank accounts, investments, retirement accounts, life insurance, personal property, business interests, digital assets.
  • Obtain date-of-death valuations for all assets (appraisals for real estate and non-publicly-traded assets; account statements for financial assets).
  • Determine the cost basis of all assets (many receive a stepped-up basis to date-of-death value).

4. Phase 4: Debt and Expense Settlement (Months 2-6)

  • Identify and pay legitimate debts: Credit cards, medical bills, mortgage, personal loans, outstanding taxes.
  • Pay trust administration expenses: Attorney fees, CPA fees, appraisal costs, trustee fees.
  • Handle any creditor claims: While trusts do not go through formal probate creditor processes, some states have procedures for creditor notification. Consult your attorney.
  • Cancel unnecessary services and subscriptions in the grantor's name.

5. Phase 5: Tax Filing (Months 3-12)

  • File the grantor's final personal income tax return (Form 1040) for the year of death.
  • File trust income tax returns (Form 1041) for income earned by the trust after the grantor's death.
  • File federal estate tax return (Form 706) if the estate exceeds the federal exemption ($15 million per person in 2026). Due 9 months after death.
  • File state estate/inheritance tax returns if applicable.
  • Obtain tax clearance before making final distributions.

6. Phase 6: Distribution and Closing (Months 6-18)

  • Prepare a trust accounting documenting all assets, income, expenses, debts paid, and proposed distributions.
  • Provide the accounting to beneficiaries and obtain their approval (or handle any disputes).
  • Make distributions according to the trust terms: This may be outright distributions, creation of sub-trusts (e.g., for minor beneficiaries), or ongoing trust management.
  • Transfer asset titles: Deed real estate to beneficiaries, retitle vehicles, transfer investment accounts.
  • Retain a reserve for any outstanding expenses, potential tax adjustments, or unexpected claims before making final distributions.
  • Close trust accounts and file final tax returns once all distributions are complete.

Common Mistakes

  • Distributing assets before paying debts and taxes
  • Not obtaining a new EIN
  • Failing to notify beneficiaries within the required timeframe
  • Commingling trust funds with personal funds
  • Making unequal or premature distributions

Pro Tips

  • Read the trust document carefully — multiple times
  • Hire a trust administration attorney
  • Get the EIN immediately
  • Send formal written notifications
  • Create a detailed inventory spreadsheet

Sources

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