Trustees Must Act According to Law, But There Are Limits on Their Obligations
When administering a trust, trustees have a great deal of responsibility on their plates. In addition to the tasks associated with administering the trust itself, the trustee must also fulfill certain duties and obligations that it owes to the beneficiaries of the trust. Some beneficiaries assume that the trustees obligations extend beyond the scope of what they actually cover. Just as it is important that trustees know their responsibilities, beneficiaries should also make an effort to understand what a trustees obligations are.
Duties a Trustee Does NOT Owe You
What are some common examples of duties that a trustee does not owe to a beneficiary? The following is an overview:
- The trustees obligations are not to look out solely for your best interests if there are other beneficiaries of the trust and doing so would favor you over the others. He or she cannot favor one beneficiary over another unless instructed to do so under the terms of the trust. The trustee must look out for the best interests of the beneficiaries as a whole. He or she must act impartially while taking into account the differing interests of the multiple beneficiaries.
- The trustees obligations are not to go above and beyond when it comes to the management of trust property or the administration of the trust. The duty of the trustee is to exercise reasonable care and skill when administering the trust. He or she must take care of the property of the trust with the same good faith and effort as one would for one’s own property. Unless the trustee has a higher level of skill than an ordinary individual, that is the extent of his or her duty to exercise reasonable care and skill.
- The trustee does not need to provide you with monthly accountings pertaining to the trust property, unless called for under the terms of the trust. Typically, the trust will state how often the accountings must be rendered. Usually, they are called for on an annual or semi-annual basis.
- The trustee does not have to attempt to make investment related decisions on his own, without the guidance of a professional. Even though as a beneficiary you may not like the fees that are paid to an investment advisor, the trustee has a right to seek professional advice when it comes to the investment of trust assets.
- Similarly, the trustee does not have a duty to make sure that all investments perform positively. As long as the trustee is acting prudently and seeking guidance from professionals, he or she is not responsible for the performance of trust investments.
- The trustee does not have to respond to your every request immediately. For example, if you ask the trustee a question about the trust on a Sunday morning, it is not unreasonable for him or her to not get back to you for a day or two. The trustee has a duty to communicate with the beneficiaries, but is not obligated to be at their beck-and-call.
Beneficiaries of trusts would be well-served to educate themselves on the trust and estate administration process. We encourage you to get started by checking out our free guide, Understand What to Expect During a California Estate Administration. This guide will offer you an initial overview of what you can expect to happen during the coming months.