Should a Trustee Treat Beneficiaries Equally?

Under California law, the general rule is straightforward: a trustee must treat beneficiaries impartially. When a trust has two or more beneficiaries, the trustee cannot favor one beneficiary at the expense of another.

California Probate Code requires trustees to:

• Act fairly and impartially;
• Administer and invest trust assets without preference; and
• Consider each beneficiary’s interest when making decisions.

Unequal treatment may constitute a breach of fiduciary duty, particularly if the trustee’s conduct impacts a beneficiary’s distribution or causes financial harm to the trust.

To learn more about common breaches of trustee duties, read our article “20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties.“

Why California Law Requires Impartiality

California’s impartiality requirement can be broken into three core principles:

1. A Trustee Cannot Take Sides

Trustees must avoid favoritism. They cannot:

• Prefer one beneficiary’s distribution over another’s
• Give one beneficiary more information or access
• Delay or deny distributions to one while accommodating another

Trustees must act in accordance with the terms of the trust, rather than being influenced by personal relationships, pressure, or convenience.

2. The Trustee Must Invest and Manage the Trust Fairly

Trustees must manage trust investments and assets in a way that benefits all beneficiaries, even when their interests conflict.

Examples include:

• Balancing income interests and principal interests;
• Making investment decisions that reflect the needs of both current and remaining beneficiaries;
• Avoiding actions that benefit only one class of beneficiaries.

This obligation stems directly from the trustee’s standard of care, as outlined in California’s version of the Uniform Prudent Investor Act.

3. A Trustee Must Consider Differing Beneficiary Interests

Some trusts are intentionally created with unequal or conflicting interests. Even then, the trustee must act impartially.

Example

A trust contains:

• $50,000 in cash
• A $950,000 apartment building

The trust terms require a $100,000 specific gift to the settlor’s daughter, with the remainder going equally to the grandchildren. The trustee may need to sell or borrow against the building to fulfill the specific gift. Even if the grandchildren dislike the sale, the trustee is still acting impartially because the trust terms require this outcome.

Impartiality does not always mean equal treatment; it means fair treatment under the terms of the trust and California law.

When Beneficiaries Have Different Interests

Beneficiaries often have competing goals. For example:

• One may want to preserve a property in the long term.
• Another may wish to have assets liquidated immediately.
• One may depend on income; another cares only about the final distribution.

The trustee must evaluate these differing interests and administer the trust in a way that is fair overall, not skewed toward the loudest or closest beneficiary.

What to Do if a Trustee Is Treating Beneficiaries Unequally

If a trustee is acting with bias, delaying your distribution, withholding information, or managing assets unfairly, this could be a breach of fiduciary duty.

Warning signs include:

• Providing accounting information to some beneficiaries but not others
• Distributing assets unequally when the trust does not allow it
• Giving favored beneficiaries loans or advances
• Undervaluing or mismanaging trust property
• Refusing to communicate or respond to reasonable requests
• Delays that benefit one beneficiary at the expense of others

If unequal treatment causes financial harm, you may petition the court to:

• Compel the trustee to act
• Remove the trustee
• Surcharge the trustee for losses
• Recover pre-judgment and post-judgment interest
• Obtain a complete trust accounting
• Appoint a neutral professional trustee

Beneficiaries must also be aware of applicable timelines, including the 120-day deadline that may apply after receiving a Notice by Trustee under Probate Code §16061.7.

At The Grossman Law Firm, we regularly file petitions to compel distribution, seek trustee removal, or obtain damages for breach of fiduciary duty. If you suspect unequal treatment, addressing it early protects both your interests and the trust’s assets.

Related Resources

You may find the following helpful:

• Overview of California Trust Litigation
• Can a Trustee Be Removed for Mishandling Assets?
• Irrevocable Trust Beneficiary Rights in California
• Duties of a Trustee of an Irrevocable Trust
• Trustee Duties: Understanding the Trustee Standard of Care
• 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties
• Can’t Afford a Probate or Trust Attorney?

FAQ

Can trustees treat beneficiaries unequally?

Generally no. California law requires trustees to act impartially unless the trust terms specifically permit different treatment. Favoritism, unequal distributions, or biased management may be a breach of fiduciary duty.

Is unequal treatment always illegal?

Not always. If the trust document itself creates unequal gifts or differing beneficiary classes, the trustee must follow those instructions. Impartiality means fair administration—not necessarily equal outcomes.

What is a breach of impartiality?

A breach occurs when the trustee favors one beneficiary in distributions, communication, asset management, or investment decisions, especially when that conduct harms another beneficiary or violates the trust terms.

Can I remove a trustee who is mistreating beneficiaries?

Yes. Beneficiaries can petition the probate court for removal if the trustee is biased, mismanages assets, refuses to communicate, or violates California Probate Code requirements.

What should I do if unequal treatment has caused a financial loss?

Consult with an experienced trust litigation attorney as soon as possible. You may be able to seek removal, surcharge, interest, or other remedies under California law.

How The Grossman Law Firm Can Help

At The Grossman Law Firm, we assist beneficiaries and heirs throughout California in enforcing 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 at no cost to you. Qualifying matters will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.

Originally Published July 21, 2022