Table of Contents
Key Takeaways
Understanding a Trustee’s Duty to Protect and Preserve Trust Property
Taking and Keeping Control of Trust Property
How Trustees Should Preserve Trust Property
Why Proper Trust Administration Matters
Related Resources
FAQ
How The Grossman Law Firm Can Help
Key Takeaways
- California trustees must protect and preserve trust property under the Probate Code.
- This includes securing physical assets, retitling accounts, and maintaining property so it does not lose value.
- Improper control or preservation of trust assets can reduce the inheritance that the beneficiaries ultimately receive.
- If a trustee fails to safeguard trust property, beneficiaries may seek court intervention, including removal or surcharge.
Understanding a Trustee’s Duty to Protect and Preserve Trust Property
A trustee’s obligation to protect and preserve trust property is one of the core fiduciary duties under California law. When a trustee mishandles assets or fails to take reasonable steps to secure them, beneficiaries are directly impacted.
At The Grossman Law Firm, we regularly represent California beneficiaries who believe their trustee is not safeguarding trust assets as required by law. Attorney Scott Grossman has spent more than twenty years helping beneficiaries enforce their rights, remove negligent trustees, and protect the value of trust property during litigation.
Taking and Keeping Control of Trust Property
A trustee must first take control of trust property before they can preserve it. This includes:
Retitling Assets
Financial accounts, brokerage accounts, and mutual funds must be formally titled in the name of the trust. The trustee is responsible for working with institutions to provide documentation, update ownership, and ensure that all property is held correctly.
Handling New Assets After the Settlor’s Death
When a trust receives proceeds from life insurance, pensions, or other death benefits, those funds must go into a trust-owned account. Depositing trust money into a trustee’s personal account is a breach of several fiduciary duties, including the duty to avoid commingling and the duty of loyalty.
Securing Valuable Physical Property
Some assets require physical protection. Trustees must evaluate the asset’s nature and value to determine appropriate security measures.
Reasonable steps may include:
- Changing locks on real property
- Installing or upgrading alarm systems
- Storing valuables (such as jewelry) in a safe deposit box
- Removing high-value items from an unattended residence
For example, securing paintings worth a few thousand dollars may only require a locked home and a functioning alarm system. However, tens of thousands of dollars’ worth of jewelry cannot simply remain in an unmonitored home. Safeguarding high-value property demands more rigorous protection.
How Trustees Should Preserve Trust Property
Once a trustee has secured trust assets, they must preserve their value.
Maintaining Tangible Property
Real estate, vehicles, and equipment require ongoing maintenance. Trustees must:
- Keep insurance coverage current
- Handle repairs
- Prevent deterioration
- Pay the necessary property expenses
Failing to preserve real property or vehicles can lead to decreased asset value and reduced inheritances.
Limiting Access to Trust Property
Trust assets must be protected from foreseeable risks. Failure to limit access or to allow the use of trust assets in risky situations exposes the trust to unnecessary liability.
Examples include:
- Allowing a disinherited sibling with a history of violence unsupervised access to the decedent’s home
- Leaving valuable jewelry unsecured in an empty property
- Loaning a trust-owned vehicle to a family member who then gets into an accident
A trustee who exposes trust assets to avoidable risks may be liable for resulting losses.
Why Proper Trust Administration Matters
Improper control or preservation of trust property often leads to financial loss. When a trustee fails to secure assets, maintain property, or prevent foreseeable harm, beneficiaries pay the price in a reduced inheritance.
Failure to properly administer trust property may constitute a breach of fiduciary duty, giving beneficiaries grounds to seek:
- Removal of the trustee
- Court-ordered compliance
- Surcharge (financial damages against the trustee)
Beneficiaries do not have to wait for an inheritance to be diminished before taking action. California law provides remedies to prevent ongoing harm. If you suspect your trustee isn’t acting in your best interest, don’t wait. Explore 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties to learn the most common warning signs, and what you can do about them.
Related Resources
- Overview of California Trust Litigation
- How to Get Your Trustee to Distribute Your Inheritance
- Know What You’re Getting Into: The Timeline of a Trust and Estate Lawsuit
- Can the Court Remove Your Trustee for Mishandling Assets?
- Can’t Afford a Probate or Trust Attorney?
FAQ
What California law requires a trustee to protect and preserve trust property?
Several sections of the California Probate Code apply, including §§16000–16015 and §16040, which impose duties of loyalty, care, and prudent administration.
Can beneficiaries challenge a trustee who fails to secure assets?
Yes. Beneficiaries can petition the probate court for orders compelling action, suspending trustee powers, or removing the trustee entirely.
Is it a breach of duty if a trustee leaves valuable property unsecured?
It may be. Trustees must take reasonable steps to prevent foreseeable harm based on the asset’s nature and value.
What if the trustee mixes trust funds with personal funds?
Commingling is a serious breach of fiduciary duty. Beneficiaries may seek immediate court intervention.
Do trustees have to maintain real estate?
Yes. Trustees must preserve the value of real property by paying for routine maintenance, repairs, insurance, and property taxes.
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we help beneficiaries and heirs throughout California enforce their rights in probate and trust litigation.
Call (888) 443-6590 or fill out our Get Help Now form.
Our Intake Specialists can evaluate your case to assess your situation at no cost to you. Qualifying cases will be scheduledfor a Free Phone Consultation with Attorney Scott Grossman.
Originally Published May 9, 2022