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Estates & Trusts

What is an Estate?

Estates include all property of a decedent, including real property, tangible personal property and intangible property. For tax purposes, "estate" usually refers to a separate taxable entity that comes into being upon an individual's death.

An estate is also created when an individual files for bankruptcy under Chapter 7 or Chapter 11 of Title 11, United States Code, Bankruptcy. Income and deductions are reported on California Form 541 during the period of bankruptcy administration.

Refer to R&TC §13401-13411 for more information on what defines an estate.

Estate Assets

Assets include, but are not limited to the following:

Individuals Businesses
bank accounts rights and licenses, and
homes business holdings under their name
cars, and  
any other assets the decedent has to their name  

What is a Trust?

A trust is an arrangement in which one party, the fiduciary (or "trustee"), is designated to hold and administer property for the benefit of another party (the "beneficiary").  A trust is typically memorialized by a written instrument.  For tax purposes, certain trusts are treated as separate taxable entities.  The creator of the trust, known as the "grantor" or "settlor"  will transfer legal title of property to a fiduciary/trustee that administers and manages the property for the benefit of the beneficiary.

Trusts generally have the following basic elements:

  • A settlor or grantor demonstrating an intent to create a trust,
  • A trustee or fiduciary; the person, who administers the trust,
  • A beneficiary; the person for whose benefit the trust property is held by the trustee, and
  • Trust property.

Refer to Cal. Probate Code section 15200, et seq. for more information on what defines a trust.

What to report

California Fiduciary Income Tax Return, Form 541 must be filed in order to:

  • Report income received and/or earned by an estate or trust.
  • Report income that is accumulated by an estate or trust or currently distributed to beneficiaries.
  • Report the current tax liability of the estate or trust.
  • File an amended return for the estate or trust.

Form 541 – Schedule G: Nonresident | Part-year Resident

Complete Schedule G on Side 3 of Form 541 for nonresident trustees/beneficiaries, first, before completing Form 541.

Do not file Form 541 if there are no California fiduciaries, California noncontingent beneficiaries, or California sourced income.

See Apportioning Trusts for more information.

Forms and Instructions

Form 541-A - Trust Accumulation of Charitable Amounts | Instructions

Form 541-B - Charitable Remainder and Pooled Income Trusts | Instructions

Estates & Trusts Resources

* Estates and Trusts use the same tax rates as individuals with filing status single/married filing separately.

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Last Updated: 11.29.2018

 

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