Trust Administration and Real Estate: When a California Successor Trustee Needs an Appraisal

This article is general information, not legal or tax advice. Talk to your trust attorney or CPA about your situation.

Trust work is some of our favorite work. A trust file can hold anything from a single storefront to a portfolio of apartment buildings, warehouses and ranch land spread across several counties. This guide is written for the successor trustee: what the appraisal is for, which value to order, how it fits the first months of administration, and what to send so the report gets done right.

Why does a successor trustee need an appraisal?

When the person who created a revocable trust dies, the successor trustee takes over the trust property and the duties that come with it. California’s Probate Code spells out several of those duties, and many of them are hard to carry out without supported values:

• Take control of and preserve the property (Probate Code Section 16006). You cannot insure, lease, refinance or sell a building well without knowing what it is worth.
• Deal impartially with the beneficiaries when there are two or more (Section 16003). When one beneficiary takes a building and another takes cash, an independent value is the fairest way to show everyone was treated evenly.
• Keep beneficiaries reasonably informed (Section 16060) and answer reasonable requests for information (Section 16061).
• Account at least annually, at the end of the trust and on a change of trustee, to beneficiaries entitled to current distributions, subject to exceptions in the statute (Section 16062).

Outside the Probate Code, the CPA usually needs a date-of-death value for income tax basis. Under federal tax rules, inherited property generally takes a basis equal to its fair market value at death, which matters when a building is sold later. Larger estates may also need real estate values for a federal estate tax return. Your CPA decides how those rules apply.

Which value does the trustee need: date of death or current value?

This is the first question we ask on the phone, because it sets the whole assignment.

• Date-of-death value. Market value as of the day the settlor died. It is a retrospective appraisal, built from the sales, rents and market conditions of that date, with the property described as it was then. It supports basis, estate tax filings and the trust’s starting records. If your CPA elects an alternate valuation date for estate tax, we can appraise as of that date too.
• Current value. Market value as of a recent date. Trustees often need it to divide property among beneficiaries, to set a fair price when one beneficiary buys out the others, to decide whether to sell, or to price a listing.
• Both. Very common in trust work. One report can carry a date-of-death value and a current value, using the market data for each date.

Which date governs an allocation or a distribution depends on the trust instrument, so ask your attorney before you engage. Tell us the purpose and the dates, and we will scope the report around them.

What happens in the first months of a trust administration?

Every trust is different, and your attorney runs the legal calendar. These are the deadlines we see shape appraisal timing most often:

1. Notification by trustee: 60 days. When a revocable trust becomes irrevocable because of a settlor’s death, the trustee must serve a notification on the beneficiaries and the deceased settlor’s heirs no later than 60 days after the death, under Probate Code Section 16061.7. The notice carries a warning that a recipient generally may not bring an action to contest the trust more than 120 days after it is served, or 60 days after a copy of the trust terms is delivered during that 120-day period, whichever is later (Section 16061.8). Beneficiaries often start asking about values right after the notice arrives.
2. Change in ownership statement (BOE-502-D): 150 days. Under Revenue and Taxation Code Section 480(b), when real property passes by reason of death, including through a trust, the trustee (if the property was held in trust) or the transferee must file a change in ownership statement with the county recorder or assessor in each county where the decedent owned real property, within 150 days after the date of death. The State Board of Equalization’s information sheet says to use form BOE-502-D, Change in Ownership Statement, Death of Real Property Owner, completed for each parcel and obtained from the county assessor. If a written request from the assessor goes unanswered for 90 days, a penalty can apply under Section 482.
3. Property held in an LLC or partnership: 90 days. If the decedent owned interests in a legal entity that owns California real estate, the BOE says the death can cause a change in control or ownership of the entity, reported to the BOE on form BOE-100-B within 90 days. Your attorney will know whether it applies.
4. Exclusion claims. If a family home or family farm qualifies for the parent-child or grandparent-grandchild exclusion, a separate claim (BOE-19-P or BOE-19-G) is filed with the assessor. The BOE notes that the claim is generally due within three years after the transfer, or before a transfer to a third party, and that the home has to become the heir’s principal residence within one year.
5. Keep paying property taxes. The BOE reminds trustees that property taxes stay due on the regular installments even before property is distributed.

The appraisal is not one of those filings, but a value ordered early makes all of them easier, and it gives the trustee something solid to share when beneficiaries ask.

Will the county reassess commercial property in the trust?

Generally yes, unless an exclusion applies. The BOE explains that for property tax purposes, real property owned by a person who dies changes ownership as of the date of death, even if the property stays in the trust for years before it is distributed. Transfers to a surviving spouse or registered domestic partner are excluded.

Proposition 19 changed the parent-child picture for transfers on or after February 16, 2021. Under Section 63.2, the exclusion now covers a family home that becomes the child’s principal residence (with a value limit the BOE adjusts every two years) and a family farm. The BOE’s comparison chart says it eliminates the exclusion for other real property. So an apartment building, a retail center or an office building passing to the children is generally reassessed to market value as of the date of death. Agricultural land may be a different story if it qualifies as a family farm, which is a question for your attorney.

When the assessor enrolls a new value after a death, it often arrives as a supplemental assessment, and the window to challenge it is short: in most counties, 60 days from the mailing date on the notice, under Section 1605 (Los Angeles County and counties that adopt a resolution use 60 days from the tax bill instead). A new base year value can also generally be appealed during the regular filing period for the year it is enrolled or any of the three following years, under Section 80. Confirm every deadline with the clerk of the board in the county. A supported date-of-death appraisal is the evidence you would build that case on. See our page on property tax appeal appraisals for how the appeals board weighs evidence.

Is a probate referee involved in a trust administration?

Usually not. In a formal probate, the personal representative files an inventory and appraisal with the court (Probate Code Section 8800), and a court-designated probate referee appraises most of the non-cash property (Section 8902). Property held in a funded living trust generally stays out of probate, so no referee is assigned to it, and the trustee orders a private appraisal instead. When some assets went through probate and others sat in the trust, the family may end up with both. Our date-of-death guide covers the referee question in more detail.

How do you appraise a trust that holds several commercial properties?

Trusts with real estate rarely hold just one property. A typical file might have a strip center in San Diego County, a small apartment building in Los Angeles, a warehouse in the Inland Empire and some acreage up north. A few things make that work go smoothly:

• One firm, one effective date, one standard. Every property is valued as of the same date of death with the same approach to the market, so the numbers line up when the attorney and CPA put them side by side. We appraise in every California county, from San Diego to the Oregon border.
• A separate value for each property. Each building or parcel gets its own supported value, which is what the BOE-502-D filings, the CPA’s basis schedule and any allocation between beneficiaries need.
• Leases and income as of the right date. For income property, the rent roll, leases and operating statements that were in place on the date of death drive the value, not today’s tenants.
• Real estate, not the entity. When a building sits inside an LLC or a family partnership, we appraise the real estate. Valuing the entity interest itself, and any discount for lack of control or marketability, is business valuation work your CPA may assign to a specialist. When a trust holds a partial interest in a building, tell us early so we can scope how the real property is valued.
• Disputes later. If beneficiaries end up disagreeing, a narrative report that shows its comparables and reasoning is a solid starting point for counsel, including in a partition action.

We appraise every commercial property type: office, retail, industrial and warehouse, multifamily, mixed-use, gas stations, hotels and motels, land, vineyards and agricultural property, medical, care facilities, religious facilities and special-use property, plus the family home when it is part of the same trust. See the full list of property types.

What should a trustee send the appraiser?

• The date of death, and any other effective date your attorney or CPA needs
• The purpose: basis, estate tax, allocation or distribution, sale, buyout or a dispute
• A list of every property, with addresses and APNs, and how each is held (in the trust directly, in an LLC or partnership, or as a partial interest)
• The trust attorney and CPA on the file
• For income property: leases, rent rolls and operating statements from around the date of death, plus current ones if you also need a current value
• Recent property tax bills, and any assessor notices received since the death
• Any prior appraisals, purchase documents, permits or reports on condition
• Notes on changes since the date of death: repairs, damage, new tenants, vacancies
• An inspection contact for each property

Your appraiser will confirm the exact list on the first call. A single owner-user building needs less. A multi-tenant portfolio needs more.

How do trustees, attorneys and CPAs work with PM Appraisal?

Call or text (805) 990-9700. You talk directly to the appraiser on your assignment, not a coordinator or an appraisal management company. We confirm the properties, the effective dates, the purpose and who will rely on the report before anyone engages. When the CPA or a beneficiary’s attorney has a question later, it goes straight to the person who wrote the report.

Rush commercial appraisals take 5 to 7 business days. Standard timing depends on the property and scope, and with a multi-property trust we can plan the order of the properties around your attorney’s calendar. Our opinions are independent: we never take an assignment that requires a predetermined value, and our fees are never tied to the result.

Trust administration is one example of the work we do. Our team handles every kind of commercial appraisal, from date-of-death and retrospective work to lending, divorce, litigation, partition, tax appeal and more, for every commercial property type in California.

Keep reading

• Estate and trust appraisals
• Date of death appraisals
• Date of death appraisal in California: what heirs, trustees and CPAs need to know
• Retroactive (retrospective) appraisals
• Property tax appeal appraisals
• Partition action appraisals

This article is general information, not legal or tax advice. Talk to your attorney or CPA about your situation.