Do I need to Notify Anyone once I become a Trustee of the Trust?

Legal Notice as a Trustee

Welcome back to our Trust 101 Series. This is video two in module two of our Trust 101 Series. In this particular video, we’re talking about: do I need to notify anyone once I become the trustee of the trust? If you haven’t watched the prior videos, I encourage you to check those out. This one will make more sense. Learn more about trust administration.

But in this specific video, we’re assuming that you as the trustee have been installed as the successor trustee of a trust. There’s an affidavit of successor trustee that does that. Once that happens, and now you’re the formal legal trustee of a trust, do you need to tell anybody about that? Learn more about how long trust administration takes in California.

And the answer is absolutely, yes. There are many legal requirements about notice, and notices are the legal word for letting people know that you’re serving as the trustee of a trust. So, first of all, we need to distinguish whom we notify based on whether the person who created the trust has passed away or is incapacitated. If that person is incapacitated, there are usually fewer people to notify because the trust is typically still revocable. It’s probably a good opportunity to take a little bit of a detour and explain the difference between those two things because we didn’t talk about that in our prior videos. Lawvex's California guidance on whether a new trustee must notify anyone is now clear and current. Learn more about successor trustee responsibilities.

Difference between revocable and irrevocable trust

Revocable Trust

But a revocable trust is generally a trust that the person who created it, the trustor or grantor, can revoke, change, edit, or terminate it. They can do whatever they want with it. They can put assets in, and they can take assets out. It’s revocable. Learn more about California probate timeline.

Irrevocable Trust

An irrevocable trust, on the other hand, can’t be changed anymore. The person who created it may have set it up that way from the beginning, or a revocable trust may become irrevocable when the grantor or trustor dies. So, if you’re serving as the trustee of a trust where somebody died, you can’t go in and change the terms of the deal. That’s not what they originally set up. You have a duty as the trustee to follow the terms of the trust instrument.

Who to Notify

So, in a revocable trust situation, the trust is still revocable when the grantor is incapacitated. If you’re serving as trustee because a parent or friend has experienced a health event, such as a stroke or dementia, and is unable to serve anymore, you generally only have to notify that person and any other trustee. If there is another trustee, that person is someone serving with you. For simplicity, let’s consider this a sole trustee situation. And so in a revocable trust, you don’t need to tell the future beneficiaries who might receive assets once the grantor dies because they aren’t beneficiaries yet. The beneficiary is still the person who is incapacitated. That’s who you’re working for, and that’s who needs notice.

In an irrevocable trust situation, a lot of people get notice when the grantor dies. First, I would say that the quickest time period for notifying anyone is notifying the public. In California, we have a legal requirement that when someone passes away, the original will has to be lodged or filed with the probate court in the county where the person died. That provides public notice that the person has passed away. That’s actually the first thing that needs to happen: lodging the original will in the county’s probate court where the person passed away. After that, there is a 60-day notice requirement. So, within 60 days after the person dies, California law requires the trustee, once installed, to notify the heirs of the person who died and the beneficiaries.

Notifying Heirs

Let’s talk about who those people are. An heir is somebody who would inherit from the person that died if they didn’t have a will or a trust. So these will typically be their surviving spouse or their children or grandchildren, depending on whether their children survived or not. But those would be heirs, so natural heirs and beneficiaries are anybody who is named in the trust or a prior amendment to the trust and could be multiple amendments. And so there might be multiple people in there that were previously named as receiving some benefit from the trusts. And so you got to tell those people that you’re serving as the trustee of the trust, and you’ve got to give them notice in a certain way. And it’s all based on this probate code section in California 16061.7 for those of you who like to look things up. But a 16061.7 notice is to heirs and beneficiaries that, hey, I’m the new trustee I’m going to be serving; here’s my address. And it lets them know who you are and what’s going on.

It also does two things. Number one, it starts a time clock of 120 days within which they have to file a contest to the trust. Really important for trustees to start that clock as soon as possible. So we want to get that rolling because we want to know as quickly as we can if anybody is going to fight about this trust and say, for some reason, it was invalid. So we’ve got to send the notice in order to start that clock. The second thing that’s really important about the 16061.7 notice is it lets them know where to find you. It’s got your address, or when we’re representing trustees, often it has our address, and it allows them to request a copy of the terms of the trust and the will. And so a lot of people ask us, “am I entitled to a copy of this? My relative passed away,” and the answer is typically, yes! If you’re an heir or a beneficiary of a trust, you’re entitled to a full copy of the will, the trust, any amendments to the trusts. And you would request that after the trustee sends this notice out. And usually there’s a little form on there and it says, “I’d like to receive a copy of it.” As a sort of a matter of precaution in our practice, we would just send them a full copy of the trust in any amendments without even having them ask for it typically. And then that helps them not to feel like they have to bother us for it. But yes, you want to notify heirs and beneficiaries using your 16061.7 notice.

And then there’s a couple of other people that need to know when somebody passes away. The first is the Department of Health Care Services in California. We are required to send them notice when a surviving spouse passes away because they need to be aware in order to potentially make a claim for any Medicaid benefits that were received. Public benefits that they administer, and they need to know if they need to file a creditor’s claim. So they’re one party that gets noticed, and then the second one is the franchise tax board. So the California Franchise Tax Board needs to be aware that this person has passed away. And that way, they know that the Social Security number is no longer valid. That kind of leads me to the final point, that after you send notice to everybody, we also obtain a tax identification number for this irrevocable trust. And if you don’t know what an irrevocable trust is, we talked about it a little bit before. But the trust needs to have its own tax ID number. The trust tax I.D. number is not your Social Security number as the trustee. It has its own tax I.D. number. And you can get that from the IRS. And that will be important for our next discussion when we talk about what to do next and how to get a hold of assets, and so forth.

But this video I just wanted to share with you, there’s a couple of people that really need to be notified if you become the trustee of a trust, and there are some special forms that you need to supply to them to be able to take advantage of that, starting the time clock so that they can’t contest the trust after the 120-day period. Hopefully, this helped you understand notice and how we give notice as a trustee of a trust. And stay tuned for our next videos where we talk about what I do next and how I get a hold of the assets?

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