Selecting a Successor Trustee of Your Trust

Selecting a good successor trustee (or co-trustees) to manage your trust after you die—or, if you’re married, on the last to die of you and your spouse—is one of the most important things you will ever do in connection with your estate planning.

A Challenging Duty

Being a trustee can be a thankless and burdensome task, and the compensation an individual receives is often not worth the on-going headaches that may arise from preparing accountings and such things as bickering among, and dealing with requests from, beneficiaries.  Because of the challenges, the individual you choose needs to view the duties of a Trustee as a service he or she is providing to your beneficiaries and to the deceased loved one.  It is best that you ask the person(s) you desire to serve as your successor trustee if he or she is willing to so serve.

Typically, unless you have a very large estate, you will select one or more of your children, or if you do not have any children, a relative.  For a very large estate, you may wish to appoint an institutional trustee, such as a bank.

Necessary Qualities

Select as your successor trustee a person (or persons) you trust, someone who is level-headed and able to make decisions of a business nature.  It is important your successor trustee has the ability to get along well with (that is, can “handle”) your beneficiaries.  In fact, your selected successor trustee may himself or herself be a beneficiary.  This makes it a little easier to justify the tough work ahead.


Sometimes selecting successor co-trustees (to act jointly) is a good idea—especially among siblings—since a brother or sister who was not asked to serve might have hurt feelings from being “left-out.”  However, financial institutions may require that in the case you have appointed successor co-trustees, each co-trustee must have so-called “independent authority.”  That is, each co-trustee must have power over the account without requiring the approval of the other co-trustee.

Since virtually every situation is different, we are here to help you consider all the factors before making your selection.

Some Estate Planning Basics

It is important to understand some estate planning basics when considering how to pass on your property when you die.  Surprisingly, about 35% of folks die in San Diego without leaving a will or trust to pass on their property.  This is called dying “intestate.”  The result is that your property passes to your heirs in a “pecking order” pre-established by the California Probate Code–possibly not in the manner you would have chosen had you made a will or a trust.  Another negative consequence of dying intestate is that your estate may require a costly and time-consuming probate before title to the property can be transferred to your heirs.

Will or Trust?

To effectively pass on your property, should you use a will or a trust?  As a starting point, if you own a home, you should make a trust.  This is because when you die, no probate of the trust would be required, whereas a probate would be required if this house passed, instead, by a will.  When you do set up a trust, be sure to transfer title to the house by deed to yourself as trustee of your new trust.

What is a Trust?

Just what is a “trust?”  A trust is an arrangement whereby you as “trustor” transfer certain property to a “trustee” who is typically yourself while you are alive.  The Trustee holds and manages this property for the benefit of a “beneficiary”, again, who is typically yourself while you are alive, and whoever you leave the property to upon your death.  The terms of this trust are set forth in a trust instrument which is usually called a Declaration of Trust or Trust Agreement.

Revocable Living Trust

In the above case, what type of trust should you use?  Typically, you will use what is called a revocable living trust.  Such a trust is “revocable,” since you can change its terms in any manner while you are still alive.  It is “living,” because it is created while you are alive.

Other Documents

If you create a revocable living trust, there are other supplemental estate planning documents you should have.  Here are the most important ones:

  • Will: the purpose of this will provides that anything not transferred into your trust or disposed of by other means (such as a life insurance policy death benefit payable to its beneficiary) will pass to your trust and be distributed as a part thereof.
  • General Power of Attorney: this is a general/financial power of attorney, by which you designate an “agent” to conduct your affairs if you are unable.
  • Advance Health Care Directive: this document contains a health care power of attorney – by which you designate an agent to make emergency medical and related decisions on your behalf if you are unable; it sets forth “pull the plug” provisions if you so desire; and it provides organ donation directions as you see fit.

If you’re married, what estate planning documents do you need?  Typically, a married couple will have one “joint” trust instrument between yourselves, and a separate will, general power of attorney, and advance health care directive for each of you.  We have comprehensive packages available to assist you with these estate planning basics.

The above “Basics” are generalizations only and should not be taken as legal advice for the reader’s particular situation.

Administering your Trust Upon Your Death

Trust Administration Tasks After the creation and funding of your trust, administering your trust is the next most important activity to occur.  You may wonder what is involved when your successor trustee administers your revocable living trust following your death.  Here are some of the primary actions your successor trustee will need to take:

Trust Administration Tasks and Notifications

The initial tasks of trust administration entail securing your estate and sending various notifications as required by California law.

  1. Arrange for the on-going care of your pets; secure your home; and make the final arrangements for the disposition of your body.
  2. Order several Death Certificates through the mortuary to be used in connection with closing financial accounts and transferring title to real property.
  3. Mail out “Notice to Beneficiary/Heir” letters, as required by California law, informing your beneficiaries that the administration of your trust has begun.
  4. Notify the California Department of Health Care Services as required by California law if you received or may have received any benefits from Medi-Cal.

Accounts and Appraisals

Trust administration requires the trustee obtain a trust account and ascertain the date of death values for your estate.

  1. Obtain preliminary value of your estate to determine whether a federal estate tax return may need to be filed with the IRS (this should be filed within nine (9) months from the date of your death).
  2. Open a new checking account in the trust name (or convert an existing account).  This account will be used to pay all of your debts and on-going trust expenses.  In this connection, obtain from the IRS a new income tax reporting number (EIN) for the trust which the bank will require, since your trust became irrevocable upon your death.
  3. Transfer title to all financial/brokerage accounts from your name into the successor trustee’s name, or close (sell the assets in) all or some of such accounts and transfer the proceeds into the new account in the trust referred to in Paragraph 6 above.
  4. Locate all outstanding bills and pay same from the account referred to in Paragraph 6. above.
  5. Make claim for any death benefit(s) payable on your death.
  6.     As to any personal property in your estate, have an appraisal of such property made by an estate personal property appraiser, and sell such property and deposit the sale proceeds into the trust bank account, or divide such property among the entitled beneficiaries based on value or as otherwise required by the terms of your trust.
  7. Obtain date of death values of all other property in your estate.Your banks and brokerage firms can provide the trustee with a statement(s) covering the time of your death and/or a letter providing the date of death value(s) of such account(s).  The trustee will probably need to hire a qualified real estate appraiser to value your real property(ies) (needed for income tax basis purposes).

Administration and Distributions

Successful trust administration involves distributing your estate according to the terms of your trust, but it also involves accountability on the part of the trustee.

  1. The trustee should keep a good record of all trust income and expenses and trust distributions, since an accounting should typically be provided to each beneficiary at the end of the trust administration.
  2. The trustee should pay to himself or herself the compensation he or she is entitled to under the terms of the trust; and if none is provided for, “reasonable compensation” as authorized by California law.
  3. After all estate expenses and debts have been paid, make the distributions to your beneficiaries called for by the trust.
  4. Have an accountant prepare and file the needed income tax returns for you and for the trust.

The above statements are generalizations only and are not to be taken as legal advice for the reader’s particular situation.

The Problem with Holding Title as Joint Tenants

Joint tenancy is one way for spouses to transfer propertyMarried couples in San Diego often hold title to their real and personal property as “joint tenants.”  Joint tenancy carries with it the right of survivorship in the surviving spouse upon the death of the first spouse to die.

Such a means of taking title does, indeed, result in the surviving joint tenant receiving full title to the property.  This transfer of full title happens without an expensive and time-consuming probate administration of the estate of the first spouse to die.  Holding title as joint tenants is thus an efficient means of passing title.

On the other hand, here are some negatives:

Joint Tenancy and Probate Administration

If you die together, you still must have a will or trust in place to indicate to whom your property should go.  If you have neither a will nor trust, then a probate administration will be required.  Then, who actually receives your property will be determined by the laws of intestacy.  In this case, your property may go to a person or persons whom you had no intention of receiving your property.  Further, if you die leaving only a will, probate will still be required, because the law generally requires that wills be probated.

Also, the same type of survivorship problem may arise following the death of the surviving joint tenant.  If the survivor of you dies without placing the property in a trust, the survivor’s estate will generally require a probate if the value of the estate exceeds $166,250.

Joint Tenancy and Tax Liability

On the death of the first of you, only the decedent’s one-half (1/2) interest in the property will receive a “step-up” in basis for income tax purposes.  This could result in a greater income tax liability should the surviving spouse decide to sell the property.

Fortunately, California law gives you an option to joint tenancy while retaining the joint tenancy’s survivorship benefit.  A husband and wife can now take title to their real property as “husband and wife as community property with right of survivorship.”  Under this law, the basis in both spouses’ half interest is “stepped-up” to the value of the property at the time of death of the first spouse to die.  This will minimize any income tax liability should the surviving spouse decide to sell the property.

The above statements are not to be taken as legal advice for the reader’s particular situation.

The Essential Objectives of Estate Planning

The Objective of Estate Planning

The essential objectives of estate planning are:

Probate Fees

“Probate fees” are the attorney’s and executor’s fees allowed by law in a court-supervised administration of an estate.  One objective of estate planning is to eliminate or at least reduce probate fees by creating a revocable living trust.  All titled assets held by the trust may be distributed to your desired beneficiaries without the need of a probate.

Federal Estate Tax

If you are married and have a substantial combined net worth, be sure to take advantage of “portability.”  This is the addition of the first spouse to die’s unused lifetime exclusion amount to the surviving spouse’s lifetime exclusion amount.  To obtain portability present law requires the filing of a federal estate tax return following the death of the first spouse to die.

In this connection, consider making annual $15,000 gifts of cash or property value to family members or your favorite San Diego charity.  This will not require your filing of any gift tax return, reducing the size of your estate, therefore enabling your estate to pay less federal estate tax.

Also, the purchase of life insurance on your life may help to pay any federal estate tax owing on your death.


When a Medi-Cal recipient dies in California, the state may make an “estate recovery claim” for repayment of certain health care services received by the decedent and paid for by Medi-Cal.  Proper estate planning can protect certain assets from a potential recovery claim.  Since January 1, 2017, only certain assets are exempt from such a claim, including real property held by a trust, joint tenancy, survivorship and life estate.  In addition, consider purchasing long-term health care insurance to reduce the potential of Medi-Cal costs.


Estate planning may also help minimize the risk from a damage award against you (for example, from auto accident liability in excess of your coverage).  One thing you can do here is purchase an umbrella liability insurance policy through the insurance company providing your auto or home insurance policies.


Most importantly, the objective of estate planning is to ensure your estate will pass to the beneficiaries you desire.  You can do so by designating them in a trust and/or will or other appropriate dispository document(s).

The above statements are generalizations only and are not to be taken as legal advice for the reader’s particular situation.

Differences Between a Will and a Trust in San Diego

People often ask about the differences between a will and a trust.  This is a good question because both these documents are used to designate who receives your assets when you die.

The essential difference is that a will becomes effective when the person who signed the will (testator) dies.  A trust, on the other hand, becomes effective when the person who created the trust (trustor) signs a trust agreement or declaration of trust.

With respect to a trust, you must formally transfer into it all the titled assets you intend to become part of the trust.  Titled assets have their legal ownership reflected by title documents, such as a deed to real property or financial account statements.

Generally, for a will to be valid in California, it requires that the testator sign the will in front of two witnesses, who then sign the will themselves.  A trust needs to be signed by the trustor, and preferably before a notary public.

The primary reason to use a trust instead of a will is to avoid an expensive and lengthy court administration (probate) of one’s estate following death.  If an estate passing under a will contains real property and/or other property exceeding a certain value, it must be probated.  Assets passing under a trust, however, do not require a probate.  Here, the successor trustee is to make the dispositions of the  assets called for by the terms of the trust.

Ironically, even when you create a trust as your primary estate planning document, you should still create what is called a “pour over” will.  The main purpose of this type of will is to direct that any titled assets which you failed to transfer into your trust are to pass after your death to your trust, to be distributed in accordance with the trust’s terms.  However, a pour over will may still require a probate if the titled assets exceed a certain monetary value.

As you can see, both a will and a trust serve a purpose in an estate plan, and we are here to help prepare what is best for your needs.

The above statements are generalizations only and are not to be taken as legal advice for the reader’s particular situation.