Address for FTB Probate Notice

I recently had a client, Jordan, whose father passed away with a very straightforward estate plan: a Will naming Jordan as executor, and a simple house and bank account. He prepared everything himself, thinking he’d saved a fortune. But three months into probate, he received a notice of tax lien from the California Franchise Tax Board (FTB) for over $15,000 in unpaid capital gains taxes. The problem? His father had gifted him the house a year before his death, and Jordan hadn’t filed the required informational return. This is a surprisingly common scenario, and one that highlights why simply having a Will isn’t enough, and why professional guidance is critical.

The FTB doesn’t automatically get notified when someone dies. As executor, you have an affirmative duty to inform them, even if no tax is anticipated. The correct address for the FTB Probate Notice is:

Franchise Tax Board
PO Box 942864
Sacramento, CA 95814-0064

Why Does the FTB Need to Know?

The FTB is primarily concerned with ensuring California estate tax and capital gains taxes are paid. When assets transfer at death, the basis of those assets often “steps up” to the fair market value on the date of death. This can significantly reduce capital gains taxes when those assets are eventually sold. However, to properly administer this step-up in basis, the FTB needs information about the assets transferred, the beneficiaries, and any prior gifting. This is where things get tricky. If assets were gifted during the decedent’s lifetime, the FTB needs to track those transactions to determine the appropriate cost basis. Jordan’s mistake was failing to file Form 541, California Fiduciary Income Tax Return, within the required timeframe, triggering the penalty and interest.

What Happens If I Don’t Notify the FTB?

Failure to notify the FTB can lead to several unpleasant consequences. First, the FTB can place a lien on the estate assets, preventing you from distributing them until the taxes are paid. Second, they can assess penalties and interest, as Jordan unfortunately experienced. Third, the estate may be subject to a full audit, which can be time-consuming and costly. Finally, and perhaps most importantly, your personal reputation as executor can be damaged.

How Can a CPA-Attorney Help?

As an estate planning attorney and CPA with over 35 years of experience, I understand the complex interplay between estate law and tax law. I can proactively identify potential tax issues and ensure all required filings are made on time and accurately. My dual expertise allows me to minimize capital gains taxes through strategic planning, including proper asset valuation and utilizing the step-up in basis rules. I not only draft the estate planning documents but also handle the probate administration, ensuring a seamless transition and preventing costly mistakes like Jordan’s.

What Forms Do I Need to File?

Form 541, California Fiduciary Income Tax Return: This is the primary form used to report the estate’s income and deductions. It’s required even if no tax is due.
Form 540, California Final Return: This is the decedent’s final individual income tax return for the year of death.
Various informational forms: Depending on the assets involved, you may need to file additional forms to report gifts, sales, or other transactions.

Is a Notice Always Required?

Generally, yes. Even if the estate is small or you believe no taxes are due, it’s best practice to notify the FTB. The cost of filing the required forms is minimal compared to the potential penalties and interest. The FTB website has detailed instructions and forms available for download. Remember, this is where my experience becomes invaluable – navigating these forms can be daunting without a professional.

What If the Decedent Had Foreign Assets?

If the decedent owned assets in foreign countries, additional reporting requirements apply. requires notification to the Consul General of the foreign nation. This is a complex area, and failing to comply can lead to significant legal and tax issues.