Trustee’s Duty – Standard of Care
According to California Probate law, executors, administrators, guardians, conservators, and trustees are considered fiduciary. The trustee has agreed to act on behalf of the individual who has created the will or trust they are administrating.
What is the Standard of Care?
A trustee is required to demonstrate an overall awareness of:
- The circumstances of the beneficiaries
- The overall economic environment
- The priorities of the trust
Respecting the Standard of Care means that California trusts must be administered with reasonable levels of:
- Care. The welfare of the beneficiaries must be demonstrated in every action a trustee takes.
- Skill. The trustee must make well-informed decisions concerning the investment and distribution of the trust. Whether or not they are using professional advisors, the trustee is expected to make investment decisions on a professional level.
- Caution. Consideration of the beneficiary’s circumstances, the intentions of the trust, and the general economic environment need to be demonstrated in every decision made regarding the trust. Any investments made with trust funds by the trustee must balance risk with the potential return.
Generally, the trustee must act prudently in their handling of the trust.
Whether or not the trustee is being paid for their services, the Standard of Care must be upheld.
If you are a beneficiary preparing to sue the trustee for investment-related issues, know that the trustee’s compliance to the Standard of Care will be judged not on the outcome of any decisions they have made, but by the competence demonstrated in the decision itself.
For instance, a trustee that made a blatantly misinformed investment decision and lost money from the trust could put the trustee in violation of the Standard of Care. The outcome of a sound investment that was damaged by unforeseen complications, on the other hand, will probably not put the trustee in violation of the Standard of Care.
Are you a beneficiary concerned about the trustee’s actions in your trust administration case? The California trust lawyers at The Grossman Law Firm offer trust litigation, will contests, trust administration, and probate services. Schedule your confidential, no-charge case review with one of our attorneys today by calling 951-523-8307. Use our quick contact form to reach us online.