Most people facing this job are an adult child or a surviving spouse who has just learned they are the successor trustee. They are now standing in a house full of a parent's or partner's belongings: furniture, a car in the garage, a jewelry box, a drawer of bank statements. Brothers, sisters or stepchildren may already be asking when things will be handed out. The questions come quickly. What am I allowed to touch? What do I owe everyone? What could go wrong if I move too fast or too slowly?
This guide walks through those duties in the order a trustee usually meets them, for the belongings and accounts in a California trust.
What Personal Property in a Trust Means Under California Law
Personal property is everything a person owns other than real property. Real property is land and the buildings attached to it. Personal property comes in two kinds. Tangible personal property is things you can touch, such as household goods, vehicles, jewelry, art and collectibles. Intangible personal property includes bank accounts, brokerage accounts and business interests. The difference matters because California law sometimes treats the two kinds differently. A house in the trust raises separate questions, and those are left out of this page.
A trustee holds legal title to trust property. That means the trustee's name controls the property and the trustee signs for it. The trustee is not its beneficial owner in the everyday sense. The beneficial owners are the beneficiaries, the people the trust names to receive the property or its benefits. Their interest is called the equitable interest. The California Probate Code sets out the duties that go with holding title this way.
The settlor is the person who created the trust. The settlor often served as the first trustee. A successor trustee steps in when that original trustee dies or can no longer serve. An executor is different. An executor is the person named in a will to administer a probate estate under court supervision. "Personal representative" is the broader term that covers both an executor and a court-appointed administrator.
Taking Inventory: The Trustee's First Obligation
The first job is to find out what the trust actually holds. California law gives the trustee "a duty to take reasonable steps under the circumstances to take and keep control of and to preserve the trust property" (Prob. Code section 16006). In practice, this usually means three tasks:
- Review the trust document. Many trusts attach a schedule listing assets, and some include a general assignment of personal belongings.
- Gather financial records. Statements show which accounts are titled in the trust's name and which are not.
- Walk through the home. Note the furniture, vehicles, jewelry, art and collectibles that are there.
A written inventory becomes the starting point for every report the trustee later gives the beneficiaries. It also protects the trustee if someone later asks where an item went.
Some items have a value nobody in the family can judge, such as jewelry, art, collectibles or a classic car. A professional appraiser can set a fair market value for these. That date-of-death value also matters for income tax, as the tax section below explains.
Some property may never have been placed in the trust. A car or an account still in the settlor's own name is not a trust asset. It may need probate or one of California's simplified procedures. Which property passes outside probate is a neighboring question for the family, and it depends on how title was held.
Preserving and Protecting Trust Property
The same duty in Prob. Code section 16006 continues for as long as the trustee holds the property. For a family, this is the stretch where the house sits quiet and the belongings wait. Preserving them usually involves a few practical steps:
- keeping insurance in force on vehicles and valuable items
- securing the home and its contents
- preventing waste or deterioration, such as leaks, pests or a car battery left to die
A trustee who lets trust property be lost, damaged or stolen through inaction may be personally liable to the beneficiaries for the loss.
Small, valuable items need particular care. Jewelry, art and collectibles are often moved to a locked location or a safe deposit box during the administration. Photographs and short written notes about the condition of significant items, made when the trustee takes over, give a record of what was received and in what state.
Trust property also stays separate from the trustee's own property. Trust funds go in a trust account, not the trustee's personal checking account, and a parent's watch does not go into the trustee's own dresser drawer. Mixing the two is called commingling, and it is a breach of the trustee's duty.
The Duty to Make Trust Property Productive
A trustee's duty to make property productive applies differently to money than to belongings.
Financial personal property. Bank and brokerage accounts are expected to be managed with care. California trustees follow the prudent investor standard when investing trust funds. In plain words, that standard means investing the way a careful person would for this trust's purposes, its timeline and its beneficiaries. Leaving a large sum idle in a non-interest-bearing account for an unreasonable period can draw questions from beneficiaries.
Tangible personal property. Household goods and a family car held for distribution are generally not expected to earn income. For these items, the trustee's job is to preserve them and distribute them in a reasonable time, not to turn them into money.
The trust document may change this picture. A trust that directs a sale, or that holds property for years for a younger beneficiary, may call for a different approach. An attorney who handles trust administration can say how the investing rules apply to a given trust.
The notice requirement is often the first formal deadline a new trustee meets. When a revocable trust becomes irrevocable because a settlor has died, Prob. Code section 16061.7 requires the continuing or successor trustee to serve a written notification.
Who receives it. The notification goes to:
- each beneficiary of the trust, subject to limits in the code
- each heir of the deceased settlor (a person who would inherit if there were no will or trust)
- the Attorney General, if the trust is a charitable trust under the Attorney General's supervision
When it is due. The notification is due no later than 60 days after the event that requires it, here the trust becoming irrevocable because of the death, or, for a person entitled to notice whom the trustee did not know of at that time, 60 days after the trustee becomes aware of that person. If the trustee's office was vacant when that event occurred, or the event left it vacant, the 60 days run from the date the new trustee begins to serve.
What it contains. The notification must state:
- who the settlor was and the date the trust was signed
- each trustee's name, address and telephone number
- the address where the trust is administered
- any additional information the trust requires
- that the recipient may, on reasonable request, receive a true and complete copy of the terms of the trust
The notification must also carry this warning in boldface: "You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later." A trust attorney can confirm how that period applies.
Beyond the notice, a trustee generally owes beneficiaries periodic accountings. An accounting is a report showing the trust's assets, income, expenses and distributions, including the personal property. A trustee who withholds information about assets may face a petition to the court.
Distributing Personal Property to Beneficiaries
This is often the part a family has been waiting for, and the part where feelings run closest to the surface.
The trust document controls. A specific gift of a named item, such as "my piano to my daughter," goes to the person named. The remaining personal property is divided under the residuary clause, the part of the trust that covers everything not given away specifically.
When the trust is silent. If the trust says nothing about a particular item, the trustee uses reasonable judgment consistent with the trust's purpose and the beneficiaries' interests. California law gives trustees flexibility here. The trustee "has the power to effect distribution of property and money in divided or undivided interests and to adjust resulting differences in valuation," and a distribution in kind (handing over the item itself) "may be made pro rata or non pro rata" (Prob. Code section 16246). In practice, families divide tangible items in a few common ways:
- a selection process in which beneficiaries take turns choosing
- appraised values used to even out shares
- selling some items and dividing the money
A sale, donation or estate sale is a choice among options, each with tradeoffs, not a required step.
Every distribution is documented. The record shows what was given, to whom, on what date and at what value, and it becomes part of the accounting.
Two risks are worth knowing. When a trust has two or more beneficiaries, the trustee "has a duty to deal impartially with them" (Prob. Code section 16003). Favoring one beneficiary without authority in the trust can make the trustee personally liable. Handing out property before the trust's debts, taxes and expenses are resolved can also leave the trustee personally exposed.
Tax Considerations for Personal Property in a Trust
This section is general information, not tax advice. A CPA, an enrolled agent or a tax attorney reviews these questions for a specific trust.
The trust as a taxpayer. Once a trust becomes irrevocable at the settlor's death, it generally becomes a separate taxpayer. It often needs its own taxpayer identification number from the IRS.
Basis. Basis is the starting value used to measure gain or loss when property is sold. For property acquired from a person who has died, the basis is generally "the fair market value of the property at the date of the decedent's death." The exceptions include an election to use an alternate valuation date (26 U.S.C. § 1014(a)). The rule is often called the step-up in basis, and it is why the inventory's date-of-death values matter.
Selling instead of distributing. If the trustee sells a car or a collection rather than handing it over, the sale produces a gain or loss measured from that date-of-death basis. Capital gains on inherited property is the related question, and whether any tax is owed depends on the facts.
Income after the death. Interest, dividends and other income earned after the date of death is taxable either to the trust or to the beneficiaries. Which one depends on when and how the income is distributed. A tax professional prepares or reviews the trust's income tax returns.
When the Trustee Is Also a Beneficiary
Family trusts commonly name one of the beneficiaries, often a child or a surviving spouse, as successor trustee. California law permits one person to hold both roles.
The dual role does not change the duty. The trustee-beneficiary still acts for every beneficiary, and the impartiality rule described above applies even to the trustee's own share. The tension shows up in ordinary moments. A trustee who picks the best pieces of jewelry first, or who holds off on distributions to keep control of the belongings, may be breaching that duty. Clear records and evenhanded steps, such as appraisals or a shared selection process, help show that every beneficiary was treated fairly.
When two or more people serve together as co-trustees, they generally must act together unless the trust document allows one to act alone. In practice, both usually sign off on decisions about the property.
If other beneficiaries challenge a trustee-beneficiary's decisions, that is a contested matter. An attorney who litigates trust and probate cases handles it, and this page does not cover it. The broader list of trustee responsibilities in California covers a trustee's duties beyond personal property.
