Trust and Estate Administration in Los Altos

Support, Guidance, Organization and Structure

Trust and Estate Administration Overview

An estate or trust administration is the process of executing the estate plan if you become incapacitated or, more commonly, after your death.  This is when the fiduciaries named in the estate plan step into their formal roles. If you are a fiduciary, the team at Kohler Legacy Law Group can advise you about your duties and responsibilities and the steps required from the date of death to the date of the closing of the administration.  If you are a beneficiary under an estate plan, we can advise you about your rights and interests under the estate plan.

Administration Tasks and Timelines

The administrative process involves a lot of work, and often takes one to three years. The administration of an estate involves the collection, valuation and management of assets; payment of debts and expenses; preparation of tax returns; and distribution of the assets to the beneficiaries – all the while meeting the fiduciary requirements under the law and balancing the interests of the beneficiaries.  In addition, certain tasks must be completed within certain deadlines imposed under the law.

Guiding Your Legacy During Difficult Times

The administration is largely a rule driven process, the rules for which are set out in the estate plan itself and also in a mix of state, county and federal laws and regulations.  Often, the fiduciary appointed to administer the estate is in a period of grief, stress and anxiety, having lost a loved one, or is perhaps dealing with unhappy family members or trying to balance his or her own full-time job.  At Kohler Legacy Law Group, helping you with the administration is not just about knowing the rules.  To us, it is also about providing support, guidance, organization, and structure, collaboratively with your accountant and financial advisor.

Probate

Probate is the court supervised administration of an estate after someone dies. A probate takes place in the Superior Court of the county in which the decedent resided at the time of his or her death. In California, we generally try to avoid probate because it is expensive, time consuming, public, and highly bureaucratic. Probate typically occurs when a person dies without a will (called “intestacy”) or dies with a will and with an estate valued in excess of statutory limits. If we determine a probate is required for your particular matter, we will use our years of experience in the local court system to guide you through the process.

Revocable Living Trust

A revocable living trust is essentially a contract that controls the distribution of a person’s estate during life and at death. The trustee of the trust handles the administration of the trust for the benefit of the beneficiaries named in the trust. One of the primary goals of the trust is to avoid the involvement of the court and achieve a higher degree of privacy.

Trustee’s Fiduciary Duties

When a trustee is responsible for managing trust assets, he or she is subject to fiduciary duties and obligations imposed under the trust and under California law. These duties and obligations are in place to protect the interests of the beneficiaries of the trust. For example, the trustee is required to adhere to the terms of the trust, to provide information to the beneficiaries, to always act in the best interests of the beneficiaries and with absolute impartiality, to avoid self-dealing and conflicts of interest, and to protect and preserve the trust assets. A trustee who fails to fulfill his or her fiduciary duties risks being sued by the beneficiaries. If we represent you as a trustee, we will be sure you understand your duties and obligations, and we will help you communicate with the beneficiaries to make the trust administration process as smooth as possible.

Estate Tax

The federal estate tax is a tax on the transfer of your estate to your beneficiaries at your death. For estate tax purposes, your estate consists of everything you own or have an interest in, including your home, investments, retirement accounts, and life insurance. In some cases, assets you have gifted away may still be included in your estate for estate tax purposes. The tax is imposed on your “taxable estate,” which is the value of your estate reduced by available deductions. If your taxable estate exceeds the available estate tax exemption available at your death, estate tax will be due on the excess amount nine months following your death. Currently, the estate tax exemption is $13,610,000 (minus your lifetime taxable gifts, if any), and the estate tax rate is 40%. The estate tax exemption is adjusted annually for inflation, and on January 1, 2026, it is scheduled to be reduced by half. While California has no separate state-level estate tax, several other states do; if you own real estate in one of these other states, your estate may be subject to the federal tax and a state-level tax.

Portability

Portability is a relatively new and important tool available in estate planning. It applies only if the decedent was married at the time of death and his or her surviving spouse is a U.S. citizen. With portability, the surviving spouse essentially inherits the decedent’s unused federal estate tax exemption so on the surviving spouse’s later death, both exemptions are available to shield the estate from federal estate tax. The portability election is not automatic. A federal estate tax return must be filed within certain deadlines to elect into portability. If we are representing a surviving spouse in an estate administration, we carefully analyze the numerous factors at play, with the surviving spouse’s CPA, to determine whether or not the portability election makes sense.

Property Tax Reassessment – Limited Exclusions for Parent-Child Transfers

Under prior law, a parent could transfer his or her primary residence to a child without a property tax reassessment of the home. The parent could also transfer a secondary property (e.g., a vacation home or rental property), up to $1,000,000 of assessed value, without a property tax reassessment. Proposition 19, which became effective in April 2021, drastically altered these parent-child property tax rules. Now, the property tax benefit is only available if the home is the parent’s primary residence at the time of death (so no more reassessment exemption for a secondary property) and if the child makes the home his or her primary residence within one year of the parent’s death. If these requirements are met, there will still be a partial reassessment if the market value of the residence is greater than the assessed value at the time of death plus $1,000,000. For all other property transfers from a parent to a child, the property will be reassessed for property tax purposes to full market value at the time of death. For most of our clients, the children are already established in their own homes, and they are not inclined to move into the parent’s home. Even so, we can assist with the analysis and property tax calculations.