Trust Litigation

Successor Trustee Duty of Loyalty in California

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Successor Trustee Duty of Loyalty

Table of Contents

Key Takeaways

  • A successor trustee has a legal duty to put the beneficiaries’ interests ahead of their own.
  • A trustee cannot use trust property or their position to benefit themselves at the beneficiaries’ expense.
  • Self-dealing and conflicts of interest can lead to personal liability, removal as trustee, or other legal consequences.
  • If you believe a trustee put their own interests first, California law may give beneficiaries the right to challenge those actions.

What Is a Successor Trustee's Duty of Loyalty?

Taking on the role of successor trustee is a big responsibility. Before you agree to serve, make sure you understand what the job involves. If you are not comfortable handling these duties, it is often better to say no than to risk personal liability.
One of a trustee’s most important fiduciary duties is the duty of loyalty.
California law requires a trustee to put the beneficiaries first. The trustee cannot use trust property for personal gain or make decisions that benefit themselves instead of the people the trust is meant to protect.
At The Grossman Law Firm, Attorney Scott Grossman frequently represents beneficiaries in disputes involving alleged breaches of fiduciary duty, including claims that a trustee improperly benefited from trust assets.

Common Examples of a Breach of the Duty of Loyalty

Examples of Trustee Self-Dealing

Every trust is different. However, the following actions commonly raise concerns that a trustee has breached their duty of loyalty:
  • Buying trust property for themselves
  • Leasing trust property to themselves
  • Purchasing trust property at a foreclosure or other forced sale
  • Selling their own property to the trust
  • Selling assets between two trusts they control as trustee
  • Personally renewing a lease that belonged to the trust
  • Hiring themselves to perform work for the trust without proper authority
  • Voting trust-owned corporate stock to benefit themselves as a director or officer
  • Operating a competing business that conflicts with the trust’s interests
  • Accepting gifts or financial benefits from people doing business with the trust
Not every transaction involving a trustee is automatically improper. However, when a trustee receives a personal benefit from trust property or trust decisions, the transaction deserves careful review.

Why the Duty of Loyalty Matters

The duty of loyalty is there because beneficiaries count on the trustee to protect trust assets, not to use them for their own benefit.

When a trustee puts their own interests first or misuses trust property, the consequences can be significant. Depending on the circumstances, a California court may order the trustee to repay losses, return improperly obtained assets, or remove them as trustee.

If you believe a trustee has breached their duty of loyalty, contact The Grossman Law Firm. Attorney Scott Grossman helps beneficiaries throughout California investigate trustee misconduct, recover trust assets when appropriate, and pursue probate and trust litigation to hold trustees accountable. Taking action early may help preserve important evidence and protect your inheritance.

FAQ

Can a trustee ever buy trust property?

Sometimes, but these deals are closely watched and usually need approval from the beneficiaries or the court. A trustee should not assume a transaction is allowed just because it seems fair to them.

What is self-dealing?

Self-dealing means the trustee uses their role to help themselves, instead of putting the beneficiaries first.

Can a trustee be removed for breaching the duty of loyalty?

Yes. If a trustee breaks these important rules, a probate court in California can remove them and may order them to pay back money or return property.

How The Grossman Law Firm Can Help

If you are a successor trustee or a beneficiary with concerns, it is important to understand the duty of loyalty. Taking action early can help prevent losses and keep things from getting more complicated.
At The Grossman Law Firm, we help beneficiaries and heirs throughout California enforce their rights in probate and trust litigation.
Please call us at (888) 443-6590 or fill out our Get Help Now form to take the next step in protecting your inheritance.
Our Intake Specialists will review your situation for free. If your case qualifies, we will set up a free phone consultation with Attorney Scott Grossman.
Originally Published: October 16, 2016