You may be a surviving spouse, an adult child, a newly named executor or successor trustee, or an heir who now owns part of a house. You are carrying the paperwork of a death while still absorbing the loss. You are also about to sit across from an accountant without knowing what to ask. Most people facing this process have never had to think about basis, fiduciary returns or reassessment before. This guide walks through the questions in the order they usually come up, and it names where a CPA's work ends and an attorney's or the county assessor's begins.
Before the Meeting: What to Gather
A first meeting tends to go further when a few facts are already on the table. None of this needs to be perfect or complete; a CPA can work from rough notes and fill in gaps later. The items that usually matter most are these:
- The date of death. It sets the valuation date for basis, starts several filing periods and determines which tax year a return covers.
- A list of what was inherited. This includes real property, brokerage accounts, retirement accounts, bank accounts and any business interest.
- How title was held. It may have been community property, joint tenancy, tenancy in common, a trust, or the decedent's name alone.
- Whether there is a will, a revocable living trust, or neither.
- Where the settlement stands. That means whether a probate case has been opened or a successor trustee has taken over. Probate is the court-supervised process of settling an estate.
- The decedent's state of residence at death. This guide describes California and federal rules. Where the decedent lived elsewhere, or property sits in another state, that state's law applies.
- Any appraisals or account statements dated near the date of death.
Where things stand in the larger settlement may also come up. The estate settlement process in California gives that wider picture.
Step 1: Ask About Stepped-Up Basis and What It Means for Your Assets
This question usually comes first because nearly every later tax figure depends on it. If you expect to sell the house or the investment account, basis is what decides how much of the sale price is taxed.
Basis is the starting figure used to measure gain or loss when an asset is sold. For inherited property, the general federal rule resets it. Under 26 U.S.C. § 1014(a), the basis of property acquired from a decedent is generally its fair market value at the date of death. The exceptions include a valuation election the executor may make on an estate tax return.
That value can be higher than what the decedent paid, which is a "step-up." It can also be lower, which is a "step-down." Because gain is measured from the new figure, a sale at or near the date-of-death value may produce little or no gain. The IRS answer on taxable income from the sale of inherited property states that selling for more than basis produces a taxable gain.
Several features apply in California:
- Community property. IRS Publication 551, Basis of Assets, lists California among the community property states. It says that when either spouse dies, the total value of the community property, even the survivor's half, generally becomes the basis of the entire property. For this rule to apply, at least half the community interest must be includible in the decedent's gross estate.
- Holding period. Under 26 U.S.C. § 1223(9), inherited property sold within one year after the death is generally treated as held for more than one year.
- Gifts made shortly before death. Under 26 U.S.C. § 1014(e), the step-up does not apply to appreciated property the heir or the heir's spouse gave the decedent within one year before death.
- Income items. 26 U.S.C. § 1014(c) excludes a right to receive income in respect of a decedent.
Questions to ask: Was a date-of-death appraisal or statement obtained for each asset? Does each asset qualify for a basis adjustment? Was any of it community property? Is my inherited retirement account treated as income in respect of a decedent? A fuller explanation of the step-up in basis is available as well.
Step 2: Ask Whether the Estate Owes a Federal Estate Tax Return
Many families assume an estate tax return is either always required or never relevant. Neither is quite right, and the answer also affects the basis figures beneficiaries may be required to use.
The federal estate tax return is IRS Form 706. Whether an estate must file one depends on the size of the gross estate measured against a federal threshold for the year of death. The IRS publishes the current figure in the Instructions for Form 706. A CPA adds up the gross estate, meaning everything the decedent owned wherever it is located, and compares that total to the threshold.
According to IRS Publication 551, when an estate is required to file Form 706, beneficiaries generally receive a Schedule A (Form 8971) from the executor reporting the estate tax value of what they received. Certain beneficiaries are required to use that value as their basis. This consistency rule appears in 26 U.S.C. § 1014(f).
Questions to ask: Does the gross estate reach the filing threshold? If there is a surviving spouse, is there any reason to file Form 706 even when no tax is due? When would the return be due? Will a Schedule A come to the beneficiaries?
Step 3: Ask About California's Tax Rules — What the State Does and Does Not Impose
For an executor or trustee, the state filing question matters because the triggers are broad. An estate can meet one of them even when its income is modest.
At the state level, the CPA's attention usually turns to income tax. The California Franchise Tax Board (FTB) administers California income tax for estates and trusts. Its page on estates and trusts, last updated February 24, 2026, says the executor may have to file a return if the estate meets any of these conditions:
- the decedent was a California resident at the time of death
- gross income is over $10,000
- net income is over $1,000
- the estate has income from a California source
- income is distributed to a beneficiary
The same page says the return is California Fiduciary Income Tax Return Form 541. It says a trustee may have to file when two things are true. First, the trustee or a non-contingent beneficiary is a California resident, the trust has California-source income, or income is distributed to a California resident beneficiary. Second, the trust has gross income over $10,000 or net income over $100.
Separate from the estate's or trust's own return, the decedent's final California individual income tax return is also part of the CPA's work. The FTB page refers to a decedent's individual tax return alongside estate and trust returns.
Questions to ask: Does the estate or trust need to file Form 541? Who handles the decedent's final California individual return? Were any assets sold after the death at a gain? Is the trust treated as a California trust for tax purposes?
Step 4: Ask About Income the Estate or Trust Earned During Administration
Settlement can take months or longer, and the accounts and properties do not stop earning in the meantime. This question sorts out who reports that income and when.
An estate or trust can keep earning money while it is being settled, through interest, dividends or rent. That income is separate from the inheritance itself. IRS Publication 559, Survivors, Executors, and Administrators, says property received by inheritance is not included in income. It also says that income the property later produces, such as interest, dividends or rents, is taxable.
At the federal level, the estate's income tax return is Form 1041. Publication 559 also explains that the personal representative must file the decedent's final Form 1040 for the year of death, along with any unfiled returns for earlier years. A personal representative is the person in charge of the decedent's estate. A CPA can say whether each return is required, who signs it, and whether income is taxed to the estate or trust or passed through to beneficiaries. Inherited retirement accounts follow their own distribution and reporting rules.
Questions to ask: Does the estate or trust need to file Form 1041? Will income be distributed to beneficiaries or held? How are distributions from the inherited retirement account taxed, and on what timeline?
Step 5: Ask About Property Tax Reassessment in California
For a family keeping a parent's home, the property tax bill can matter as much as any income tax question, and it is handled by a different office on a different schedule.
When California real property changes ownership at death, the county assessor may reassess it to current market value, and the property tax bill can rise. Rev. & Tax. Code section 63.2 lets certain transfers on or after February 16, 2021 be excluded from reassessment, in whole or in part. It covers a principal residence or a family farm passing between parents and children. It also covers transfers between grandparents and grandchildren, if all the grandchild's parents who are the grandparents' children have died.
For a principal residence, the statute sets two further conditions. The home must become the transferee's principal residence within one year of the transfer. The transferee must also file for the homeowners' or disabled veterans' exemption within a year of the transfer. The statute also limits how much value the exclusion covers, and the county assessor's office can explain how that limit applies.
The exclusion is not automatic. A claim has to be filed with the assessor; under Cal. Rev. & Tax. Code § 63.2, the exclusion is not allowed unless a claim is filed with the assessor. A CPA can flag this claim. The rules on California property tax on inherited property go into more detail. The assessor's office reviews any reassessment question or exclusion claim.
Questions to ask: Could this transfer qualify for the exclusion? Who files the claim? Which county assessor's office handles it?
Step 6: Ask How the CPA and the Estate Attorney Work Together
People often hire one professional and assume that person covers everything. Knowing where each role ends helps avoid gaps that no one is watching.
The CPA and the estate attorney do different jobs, and one does not replace the other. Publication 559 describes the personal representative's primary duties: to collect the decedent's assets, pay creditors, and distribute what remains to the heirs or other beneficiaries.
- The attorney's side. A probate or trust attorney handles the legal transfer of assets and, in a probate case, the filings with the California Superior Court.
- The CPA's side. The CPA handles returns, basis and tax planning.
- Where they overlap. Both rely on the same date-of-death values, so they often need to coordinate.
The difference between court-supervised probate and the broader job is explained in estate administration vs. estate settlement.
The California Board of Accountancy's How to Select a CPA page says only persons it licenses may call themselves a CPA. It also describes receiving an engagement letter before work begins, detailing the work, who performs it and the cost.
Questions to ask: Do I also need a probate or trust attorney? Have you worked alongside estate attorneys? Who arranges the date-of-death appraisals — the attorney, the CPA, or a separate appraiser?
Step 7: Ask About Deadlines You May Not Know About
Some of the deadlines that matter most begin running on the date of death, often before anyone has met with a professional. That is why this question is worth raising early, even though it appears last here.
Under Rev. & Tax. Code section 480, a change in ownership statement must be filed for inherited real property:
- In a probate case, the personal representative files it with the recorder or assessor in each county where the decedent owned probate real property. It is due before or at the time the inventory and appraisal is filed with the court clerk.
- In other cases, including transfers through a trust, the trustee or the transferee files it in each county within 150 days after the date of death.
Under Rev. & Tax. Code section 63.2, the reassessment exclusion claim is generally due by the earliest of three events:
- three years after the transfer
- the property being transferred to a third party
- an eligible transferee no longer occupying the residence
A claim filed within six months after the mailing of a supplemental or escape assessment notice is deemed timely. If the property has not passed to a third party, the assessor still considers a later claim. Any exclusion granted then applies starting with the lien date of the year the claim is filed.
Federal due dates for Form 706 and Form 1041 appear in the IRS instructions for each form.
Questions to ask: Which deadlines apply here? Have any already passed? Are extensions available?
Typical timeline
Seen as a whole, the work tends to follow a natural order. Basis and asset values come first, since every later return depends on them. The question of Form 706 follows once those values are known. After that come the fiduciary returns, filed for each tax year the estate or trust stays open. The property tax filings in Step 7 run on their own clock, measured from the date of death or the probate inventory, which is why they can slip past while attention is on the tax returns. How long all of this takes depends on whether there is a probate case, a trust or neither, and on how long assets stay unsold.
When the Process Gets Complicated
Some estates bring in more than one kind of professional. For these estates, the questions do not change, but the people answering them may.
Business or partnership interests
Closely held stock or a partnership share may need a business appraiser. The CPA can say whether one is needed.
Property in another state
That state's tax and probate law applies. A professional licensed there may be needed alongside the California team.
Large retirement accounts
The distribution timeline and the tax on withdrawals are separate questions to put to the CPA.
Disagreement among heirs
Disputes among heirs, or concerns about an executor's or trustee's conduct, are legal matters rather than tax ones. They are handled by an attorney who litigates trust and probate cases.
Estates that may owe federal estate tax
These estates usually involve a CPA or tax attorney who works on estate tax returns regularly.
If You Are Preparing for That First Meeting
Walking into an accountant's office with a parent's statements in a folder is hard. It can help to know which of the questions above apply before the meeting starts. The Find Your Next Step questionnaire asks a few questions: your role, whether there is a will or a trust, whether real estate is involved, and what you are trying to work out. It then points to the guides and the kinds of professionals that fit.
Find your next step. The Find Your Next Step questionnaire at Silver Lining Estate shows which guides and kinds of professional help fit a situation like this one.
