5 Tax Responsibilities of a California Trustee During Administration

Of all your responsibilities as successor trustee of a living trust in California, filing returns and paying taxes is perhaps the most important. It is very important that you pay taxes in a timely manner in order to avoid penalties and fees. Fortunately, an experienced Anaheim trust lawyer can guide you through the process of implementing a trust in California, including the trustee tax responsibilities.

What are some examples of your potential trustee tax duties as you implement a California living trust? The following is an overview:

  • Obtain a federal tax ID number for the trust if the trust does not already have such a number.
  • Determine whether a federal estate tax return must be filed, and, if so, whether assets from the trust will be used to pay the tax that is owed.
  • Determine whether a state tax is owed and, if so, whether the trust assets will contribute or pay for the tax.
  • Pay the final personal income tax of the trust settlor.
  • If the assets of the trust generate income, file an income tax return for the trust.

As you prepare to file tax returns and pay taxes that are owed, it is important to properly value the assets that are part of the estate. These decisions require an understanding of complex federal and state estate and tax laws and regulations. In addition, you must pay careful attention to the terms of the trust. The trust instrument may dictate which assets should be used to pay any tax liabilities.

Our free guideUnderstanding the Revocable Living Trust - In Language that Anyone Can Understand in 8 Minutes, offers additional information about living trusts as you begin the process of implementing a plan. As you begin the trust administration process, an Anaheim trust attorney at the Law Office of James F. Roberts & Associates, APC, can help guide you every step of the way. Call our office today at (714) 459-5481 for a consultation. 

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm