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TrustTrust LitigationTrustee Duties

Trustee Duties: Is my Trustee required to invest and manage Trust assets? 

By July 28, 2025August 21st, 2025No Comments
If you haven’t gotten a copy of the trust, there might be other problems in getting your inheritance. After you finish reading this guide, you will know whether you need to initiate trust litigation and what you can expect moving forward.
Guide To Trust Litigation

Key Takeaways

  • California trustees are required to manage and invest trust assets in accordance with the Uniform Prudent Investor Act.
  • Trustees must exercise reasonable care, skill, and caution when making investment decisions.
  • Failing to invest appropriately—even if no money is stolen—may still violate fiduciary duties.
  • If your trustee’s failure has resulted in financial losses or missed opportunities for gains, legal remedies may be available..



Trustee Duties: Is My Trustee Required to Invest and Manage Trust Assets?

Yes, Trustees Must Invest and Manage Trust Assets

Suppose you’re a beneficiary and your trustee hasn’t made any effort to manage or invest trust property. In that case, you’re right to be concerned.

Under California law, trustees are required to invest and manage trust assets in accordance with the Uniform Prudent Investor Act (UPIA). The law requires trustees to act as a prudent investor would, always prioritizing the interests of the beneficiaries.

That means sitting on cash, ignoring long-term growth, or failing to formulate a proper investment strategy can all be signs of trustee mismanagement.

At The Grossman Law Firm, we’ve helped beneficiaries across California hold trustees accountable when they fail to meet these duties.

The Standard of Care Under California Law

California’s version of the Uniform Prudent Investor Act clearly states:

“A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust.”

The law also requires trustees to:

  • Make reasonable efforts to gather facts relevant to the trust’s financial health
  • Evaluate investments not in isolation, but in the context of the entire portfolio
  • Develop an investment strategy that balances risk and return in line with the trust’s goals

Many trustees wrongly assume that doing nothing is safe. But in trust administration, inaction can be just as damaging as misconduct.

What Trustees Must Consider When Investing

The trustee cannot simply maintain the same investment mix that the decedent had. Instead, they must create an appropriate strategy based on the trust’s objectives and expected duration.

Key factors trustees must consider include:

  • Whether the trust is intended for immediate distribution or long-term management
  • The risk tolerance appropriate to the trust’s goals
  • The overall performance of the trust portfolio, not just individual assets
  • Whether any assets should be sold and reinvested to serve the trust better

For example, if a trustee keeps 100% of a trust’s assets in cash for five years—when an appropriate mix of mutual funds could have generated significantly better returns—they may have breached their duty, even if no money was stolen.

What to Do If Your Trustee Fails to Manage the Trust Properly

If your trustee is mismanaging trust investments—or ignoring them altogether—it’s time to assess the damage. This includes:

  • Missed gains that a prudent investment strategy would have captured
  • Poor asset allocation that fails to reflect the trust’s goals
  • Failure to take action in declining markets or changing economic conditions

If a breach of fiduciary duty has occurred, you may need to file a petition to:

  • Surcharge the trustee (seek damages for financial harm)
  • Request prejudgment and post-judgment interest
  • Remove the trustee and request the appointment of a qualified successor

It’s essential to act quickly. The longer a negligent trustee remains in control, the greater the potential loss to the trust will be.

Related Resources

For more on trustee responsibilities and legal options for beneficiaries, explore these resources from The Grossman Law Firm:

FAQ

Is my trustee legally required to invest trust assets?

Yes. California law requires trustees to invest and manage trust assets prudently under the Uniform Prudent Investor Act.

What happens if a trustee fails to invest the trust assets?

The trustee may be held liable for any losses or missed gains caused by their failure to act. The court can impose financial penalties or even remove the trustee.

Can I sue a trustee for not managing trust funds?

Yes. If your trustee breached their fiduciary duties, you may file a petition in probate court to seek damages or remove the trustee.

Does the trustee have to follow the trust creator’s investment preferences?

Only if those preferences align with the trust’s goals and the trustee’s legal duties must the trustee act in the beneficiaries’ best interests—even if that means selling an asset the trust creator once favored.

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. Suppose your trustee has failed to invest or manage trust assets properly. In that case, we can help you evaluate your losses and pursue legal remedies to protect your inheritance.

Call (888) 443-6590 or fill out our Get Help Now form.

Our Intake Specialists can evaluate your case at no cost to you to assess your situation and determine the best course of action. Qualifying cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.