When a person dies, the decedent’s loved ones must deal with the decedent’s property. The first question the decedent’s family members need to ask is: did the decedent have an estate plan in the form of a Will or a Trust?

If the decedent did have an estate plan, the terms of the Will or Trust will govern who is entitled to receive the property. If the decedent did not sign a Will or Trust before passing, the decedent’s property may be distributed to the family members is accordance with the State’s intestacy laws. Wills and Trusts are administered through different methods. The decedent’s heirs and the beneficiaries are entitled to copies of the Will and Trust.

A Will is a testamentary instrument which governs the distribution of the decedent’s property through the probate process. The word probate can seem daunting, but it just means a court-supervised process for distributing a decedent’s assets. The person appointed to handle the estate, called the Executor, files the Will and a Petition for Probate with the court. The Executor must complete the steps outlined in the California Probate Code, which include notifying all the heirs and beneficiaries of the probate, attending a hearing to obtain authority to take control of the estate assets (called Letters Testamentary or Letters of Administration), submitting an inventory and appraisals of the estate assets to the court, paying all known and legitimate creditors, and obtaining a court order to distribute the assets to the beneficiaries.

A Trust, just like a Will, governs the distribution of the decedent’s property. However, administration of a Trust typically does not need to go through probate court. The person in charge of a Trust is called a Trustee. The Trustee distributes the Trust assets to the beneficiaries without prior court approval. Trusts contain provisions on how and when the Trustee should distribute the property to the beneficiaries. Some Trusts are set up to provide the beneficiaries with outright distributions, while some Trusts are set up to distribute the Trust assets to the beneficiaries over a long period of time.

In general, Trusts are favorable to Wills because the probate process is not required. However, Trust beneficiaries and Trustees occasionally end up in court when the Trustee does not follow the terms of the Trust or otherwise commits a breach of the Trustee’s fiduciary duties. If a dispute arises, the beneficiaries should contact an experienced Trust and Will litigation firm without delay.

Entering the world of Wills, Trusts and probate can be confusing. One of the first questions people often ask is: what is the difference between a Trustee and an Executor? To put it simply, a Trustee is the person who oversees a Trust, while an Executor is the person who oversees a Will, which often involves going to probate court.

A major difference between a Trustee and an Executor is the amount of authority and discretion each position has. Both Trustees and Executors are legally required to follow the terms of the Trust or Will and make distributions to the Beneficiaries in accordance with the Trust or Will terms. If the decedent only had a Will, the Executor must file the Will in Probate Court with a Petition to Administer the Estate (also called Petition for Probate). Information on how to file a Petition for Probate is available here.

Probate is the process in which the court oversees the valuation and distribution of the estate assets. After the Executor files the Will and Petition for Probate; the Executor must notify the Beneficiaries and creditors about the probate hearing, request authority from the court to open probate and to handle/sell the estate assets (called Letters of Administration), submit an Inventory and Appraisal to notify the court and Beneficiaries of the value of the estate assets, and ultimately seek court-ordered approval of the distribution of those assets.

Trustees, on the other hand, do not usually need to go to court. Trusts are designed to be administered outside of court. The Trustee can make distributions to the beneficiaries without seeking court approval. The trustee must still follow the terms of the Trust, but Trustees have greater authority to use their discretion in administering the Trust without seeking approval of the court prior to making distributions.

The bottom line: Both Trustees and Executors have similar duties and responsibilities. Both positions are required to gather information about the value of the assets, provide valuation information to the beneficiaries, and make distributions to the beneficiaries in accordance with the terms of the Trust or Will. Trustees have the advantage of being able to operate without court approval. However, Trustees occasionally abuse their discretion. Bad Trustees without court supervision can throw a wrench in the distribution of assets by refusing to make distributions, misappropriating Trust funds, and other violations of the Trustee’s duties. Beneficiaries who are dealing with an abusive Trustee should contact an experienced Trust and Estate litigation attorney immediately. A bad Trustee only makes matters worse over time. The faster you act, the faster you can stop the damage.

California Trustees can charge reasonable fees for their services. The amount considered reasonable varies depending on the circumstances. Professional fiduciaries typically charge a certain percentage of the total value of the Trust assets (usually around 1%), while layperson Trustees (such as family members) often charge by the hour (typically around $30-$80).

Trustees’ fees also depend on the amount of work it takes to administer the Trust. Some Trusts are more complex than others. If administering the Trust involves selling multiple properties or high-value investing, the Trustees fees will likely be higher than a liquid-asset only Trust in which the Trustee simply distributes funds from an account. If the Trustee prepares an accounting, the fees will be higher than if the beneficiaries waive the accounting.

The bottom line: Trustees can charge reasonable fees for their services, which often includes preparing an accounting. If the beneficiaries believe the Trustee’s fees are unreasonable given the circumstances, it is incumbent upon the beneficiaries to challenge those fees in court by filing a lawsuit. The court will use its discretion in determining whether the Trustee’s fees are appropriate. Unfortunately, the beneficiaries will have to bear their own attorney’s fees and costs. Before deciding to file a lawsuit against the Trustee, the beneficiaries should do a cost benefit analysis to determine whether a lawsuit would be appropriate.

Minors in California (people under the age of 18) cannot own assets directly. Minors must own assets through a guardian. However, minors can be Trust beneficiaries. Typically, when a Trust is established with minor beneficiaries, the Trust terms require the minors’ shares to be held in Trust rather than distributed outright.

Trust shares for minor beneficiaries are typically held in the Trust until the beneficiary reaches a certain age. Often, the young beneficiary’s Trust share is distributed in increments rather than an outright distribution. The Settlors who created the Trust have discretion on the specific terms of distribution for minor beneficiaries.

The bottom line: minors can be Trust beneficiaries, but it may not be wise to distribute a large sum of money to an 18-year-old. Trusts can be set up so the Trustee will hold onto and invest the assets until the beneficiary reaches a more responsible age.

How do Trust beneficiaries know how much they are entitled to? Often, rather than stating a specific dollar amount for each beneficiary, the Trust will state that each beneficiary is entitled to a certain percentage of the Trust estate. This can cause frustration if the Trustee will not provide the value of the Trust assets.

Trust beneficiaries who are kept in the dark have a right to ask for information. In many cases, beneficiaries can demand an accounting from the Trustee. Trust beneficiaries should review the Trust terms for any specific provisions regarding accountings.

Some beneficiaries have a mandatory right to an accounting, while other beneficiaries only have a right to accounting at the discretion of the court. Current income or principal beneficiaries (beneficiaries who are currently entitled to receive assets) are entitled to an accounting under the California Probate Code. Current beneficiaries can request an accounting informally (via a letter to the Trustee) and/or demand a court-ordered accounting by filing a petition in probate court.

Remainder and/or contingent beneficiaries (beneficiaries who are not entitled to assets until a specific event happens, such as the death(s) of the original beneficiaries) have a right to information, but not necessarily a right to an accounting. Remainder beneficiaries can go to court and ask the court to exercise its discretion and order an accounting.

What happens if the accounting is inaccurate

Beneficiaries can object to the accounting by writing an objection letter (for informal accountings) or by filing an objection with the court (for formal accountings). There are statutory deadlines for objecting to accountings. If the beneficiaries fail to object to a Trust accounting in the proper time frame, they will be forever barred from bringing claims relating to the accounting in the future. Beneficiaries who have questions or concerns about Trust accountings should consult with an attorney who is experienced in Trust and Estate law as soon as possible.

Who is liable for Trust debts? Is it the Trustee, the Beneficiaries, or the Trust itself? It helps to remember that a Trust is a separate legal entity. The Trustees and beneficiaries are not personally liable for debts owed by the Trust.

The Trustee is acting in a fiduciary capacity. The Trustee is required to gather the assets and pay the Trust debts. If the Trust does not have enough money to pay the debts, the creditors are out of luck. Creditors do not have the right to go after the Trustee or Beneficiaries’ personal assets.

Who gets paid if the Trust doesn’t have enough assets to cover the debts and distribute funds to the Beneficiaries? Check the terms of the Trust. The Trust will typically state that once the debts are paid, the Trustee can distribute the remaining funds to the Beneficiaries. The language of each Trust varies.

The debts of the Trust belong to the Trust, and only the Trust will have to pay Trust debts. Trustees and Beneficiaries do not have to worry about being responsible for debts incurred by the Trust.

Generally speaking, inheritance is not subject to tax in California. If you are a beneficiary, you will not have to pay tax on your inheritance. There are a few exceptions, such as the Federal estate tax. However, an estate must exceed $11.58 million dollars per person in 2020 to be subject to estate tax in the U.S. The estate tax is paid out of the estate, so the beneficiaries will not be liable for paying the estate tax, technically speaking—although it would deplete the amount left in the estate for distribution.

With the exception of the estate tax for estates exceeding $11.58 million dollars per person, California does not have a state-level inheritance tax. That is not true in every state. Some states have enacted inheritance taxes on estates of any size.

When does inheritance become taxable

If your inheritance is in Trust, a portion of the income might be subject to income tax. If the trust generates income after the trust creators (the “Grantors” or “Settlors”) pass away, the new income will be subject to income tax. For example, if the Trust owns a rental property, the rental income is subject to income tax. However, when the house is sold, the beneficiaries do not pay tax on the proceeds. Income tax only applies to income generated after the Grantors pass away, not the principal (the amount originally received).

If you receive an inheritance in California, consider yourself lucky. You can receive your California inheritance without anticipating major tax liability in most cases.

A Trust is an entity that holds assets. Living Trusts are set up to benefit the Trust creators, (also referred to as the “Settlors,” or “Grantors,”) during their lifetimes. Living Trusts also provide the terms for management and distribution of the assets once the Grantors pass away.

Living Trusts are typically drafted by an estate planning attorney. Once the terms of the Trust are established, the assets are transferred into the Trust. For example, if the Grantors own a home, the home will be legally transferred into the name of the Trustee; the Grantors will sign a deed transferring the title of the home to the Trustee and record the deed with the County Recorder’s office. The Grantor’s bank account(s) and other assets will also be transferred into the Trust. The Trustee then becomes the legal owner of the assets.


The Trustee is the Trust manager. Typically, the Grantors of a Living Trust is the original Trustees during their lifetimes. The Grantors/Trustees will manage their own assets. The Grantors can also appoint a family member, friend, or even a licensed fiduciary to manage the Trust assets. The Trustees make the financial decisions regarding the Trust assets.

Trust Beneficiaries

The Trust beneficiaries are the people who receive the benefit of the Trust assets. Typically, the Grantors are the original beneficiaries of their own assets during their lifetimes. The Grantors decide who will be the beneficiaries after the Grantors pass away. The terms of the Living Trust govern how and when the beneficiaries will receive the assets.

Once the Grantors of a Living Trust passes away, the beneficiaries receive the remaining assets. Typically, the beneficiaries are the Grantors’ children or relatives. In California, children do not have an automatic right to inherit their parent’s assets unless the Parent dies without a Will or Trust. A Trust can be created to benefit whoever the Grantor want to pass assets to.

The Successor Trustee is the person who takes over management of the Trust assets after the Grantors pass away. The Successor Trustee then must follow the terms of the Trust and manage the Trust assets. Sometimes this means selling the assets and distributing the proceeds to the beneficiaries immediately. Some Trusts are set up to provide for the beneficiaries over a lifetime in incremental payments. The method in which the assets will be distributed to the beneficiaries depends on the terms of the Trust. At some point, the assets are distributed to the beneficiaries and the Trust terminates.

Why create Living Trusts

Trusts help facilitate the transfer of assets to the beneficiaries through a trusted person (the Trustee) without having to go through the lengthy probate process. Probate is the court supervision of the distribution of a person’s assets after death. Trusts can also help people reduce estate taxes and put conditions on how assets will be managed and distributed after death.

How do you replace a Trustee? The answer depends on the language in your Trust document. Most trusts have a specific section that outlines the procedure in which a Trustee can be replaced.

Some Trustees step down willingly. In certain instances, you can have a Trustee sign a document called a Resignation by Trustee, and have the new Trustee sign a document called an Appointment or Acceptance of Trustee. This is the easiest method. An attorney who handles estate planning can typically draft these documents for you. Most Trusts name a specific person or entity to take over as the Successor Trustee or Second Successor Trustee if the original Trustee is unwilling or unable to act.

What happens if the Trustee won’t willingly step down? You may need to go to court. In order to forcibly remove a Trustee, you may need to file a lawsuit in probate court to suspend or remove the Trustee.

In order for you to succeed in forcibly removing the Trustee by court order you have to gather and submit documentary evidence and testimony to prove to the judge that the Trustee has committed some Breach of Trust, such as Trustee theft (misappropriation), self-dealing, unreasonably delaying the distribution of assets, refusing to follow the terms of the trust, or failing to perform their fiduciary duties as Trustee in some way. Once the lawsuit is filed, you can subpoena financial records if necessary.

If you attempt to remove a Trustee by court order, prepare yourself for a legal battle. The Trustee will likely hire an attorney and object to the lawsuit. The average lawsuit takes 18 months to 2 years to resolve, sometimes longer. The Trustee may attempt to use trust assets to fund the lawsuit. Unfortunately, you will have to bear your own attorneys’ fees if you file a lawsuit against the Trustee. You may be able to find an attorney to take your case on a contingency fee basis, under which the attorneys’ fees come out of the amount you receive from the trust or estate at the end of the case.

Replacing a Trustee can be easy if the Trustee agrees to step down. If the Trustee refuses to step down, you will need to seek the assistance of the court. If you believe you will need to file a lawsuit to replace your Trustee, contact an attorney who specializes in trust and estate litigation for a consultation.

How does a Trustee resign? By following the procedure in the Trust document. The Trust terms usually contain a resignation procedure to follow. The Trustee typically must give notice to the beneficiaries and to the new Trustee. This notice can be drafted by a Trust administration attorney. If there is no resignation provision, the Trustee must follow the California Probate Code (CCP). California Probate Code Sections 15640-15645 govern the procedure for Trustee removal.

What happens when the beneficiaries cannot agree on a successor Trustee? The Trustee can file a Petition in Probate Court for resignation. The Court will typically appoint a neutral licensed professional fiduciary.

In some instances, a Trustee refuses to resign. Beneficiaries can file a Petition in Probate Court to remove the Trustee.

Grounds for forcibly removing a Trustee by Court order include

  • The Trustee committed a breach of the Trust.
  • The Trustee is insolvent or otherwise unfit to administer the Trust.
  • Hostility or lack of cooperation among Co-Trustees impairs the administration of the Trust.
  • The Trustee fails or declines to act.
  • The Trustee’s compensation is excessive under the circumstances.

Filing a Petition to remove a Trustee is a lawsuit against the Trustee. Lawsuits typically take around 2 years to resolve. If the Trustee has committed certain types of fraud, such as misappropriating or stealing Trust funds, the beneficiaries can also seek reimbursement (called Trustee surcharge).