Trustee Duties: Understanding the Trustee Standard of Care

Table of Contents

Key Takeaways
What Is the Trustee’s Standard of Care?
California’s Legal Standard for Trustees
Seven Tips for Meeting the Trustee Standard of Care
What Happens If a Trustee Fails to Meet the Standard of Care
When to Seek Legal Help
How The Grossman Law Firm Can Help
Related Resources
FAQ

Key Takeaways

• California law requires trustees to act with reasonable care, skill, and caution when managing trust assets.
• The “standard of care” is based on the California Probate Code and the Prudent Investor Rule.
• Trustees who fail to meet this standard can be held personally liable for resulting losses.
• Beneficiaries may petition the court to compel accountings or remove a trustee who breaches their duties.

What Is the Trustee’s Standard of Care?

A trustee’s role is far more than simply holding and distributing property; it encompasses a broader range of responsibilities. Under California law, trustees must act as a fiduciary, a legal term meaning they must prioritize the interests of the trust and its beneficiaries above their own.

This legal duty encompasses managing assets prudently, keeping beneficiaries informed, and ensuring that all decisions align with the trust’s terms. Because the courts interpret this duty strictly, even a well-meaning but careless mistake can lead to legal consequences.

At The Grossman Law Firm, we regularly represent beneficiaries and trustees in disputes about whether the trustee met the required standard of care under California law.

California’s Legal Standard for Trustees

The California Probate Code §16040(a) defines a trustee’s standard of care:

“The trustee shall administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use.”

In simpler terms, a trustee must act with the same care and judgment a prudent person would use when managing another person’s finances or property.

California also applies the Prudent Investor Rule (Probate Code § 16047), which requires trustees to make sound, diversified investment decisions that balance risk and return appropriately.

Suppose the trust’s language specifies a higher or different standard. In that case, the trustee must follow those terms, unless doing so would violate California law.

Seven Tips for Meeting the Trustee Standard of Care

A trustee who understands and follows the standard of care can avoid costly disputes and court intervention. Below are practical steps to meet this obligation:

1. Review the Probate Code and the Trust Instrument: Familiarize yourself with California’s trustee standards and the exact wording of the trust document. The trust’s language defines your duties and limitations.
2. Act as a Prudent Person Would: Use reasonable care, skill, and caution in every decision. Think as a prudent investor would under similar circumstances.
3. Utilize Your Personal Skills: If you possess financial, legal, or management expertise, apply these skills when administering the trust. Failing to do so could be considered a form of negligence.
4. Avoid Improper Delegation: Trustees can’t delegate duties that require independent judgment, such as making investment decisions or approving distributions.
5. Seek Professional Guidance When Needed: It’s appropriate to consult professionals such as accountants, financial advisors, or attorneys—especially when handling taxes or investments.
6. Supervise Anyone You Delegate To: If you hire a professional, use sound judgment in choosing them and maintain oversight. You remain responsible for their performance.
7. Comply With Accounting Requirements: Always meet the trust accounting standards in the California Probate Code, including providing beneficiaries with timely and accurate reports.

What Happens If a Trustee Fails to Meet the Standard of Care

If a trustee fails to act prudently, beneficiaries have the right to:

• Demand trust information and accountings under Probate Code §§16060–16062.
• File a petition under Probate Code §17200 to compel an accounting or remove the trustee.
• Seek damages under Probate Code §16440, which holds trustees personally liable for losses caused by a breach of duty.

Once a beneficiary raises concerns, the trustee must provide evidence that they acted with care and good faith. The court will examine documentation, communication, and the trustee’s decision-making process to determine whether the standard of care was met.

When to Seek Legal Help

Even conscientious trustees can make mistakes—especially if they are unfamiliar with the complex rules of trust administration. Likewise, beneficiaries often struggle to tell whether a trustee’s actions are careless or simply slow.

An experienced California trust litigation attorney can:

• Evaluate whether the trustee met the legal standard of care.
• Help beneficiaries demand accountability or transparency.
• Can represent trustees accused of breaching their fiduciary duties.
• Guide clients through disputes or petitions to the probate court.

How The Grossman Law Firm Can Help

For over two decades, The Grossman Law Firm has helped California beneficiaries and trustees resolve disputes involving trust management, fiduciary breaches, and trustee misconduct. We help clients:

• Assess whether a trustee met California’s standard of care.
• File or defend petitions involving trust mismanagement.
• Recover damages caused by the trustee’s negligence.
• Navigate the complexities of California Probate Code requirements.

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 scheduled for a Free Phone Consultation with Attorney Scott Grossman.

Related Resources

Explore more California trust litigation topics:

• Overview of California Trust Litigation
• Trustee Duties: Duty Not to Delegate Tasks
• Trustee Duties: Is My Trustee Required to Invest and Manage Trust Assets?
• Tips for Determining the Damages for a Breach of Fiduciary Duties
• How Long Does a Trustee Have to Distribute Assets?
• Temporary Trustee Suspension Can Protect Trust Assets

FAQ

What is the standard of care for a trustee in California?

California law requires trustees to act with the same care, skill, and caution that a prudent person would exercise in managing someone else’s assets.

Can a trustee delegate tasks?

Yes, but only if it’s reasonable and the trustee supervises the delegate’s work. The trustee remains ultimately responsible.

What happens if a trustee fails to meet the standard of care?

Beneficiaries can seek court intervention, compel accountings, or hold the trustee personally liable for losses caused by negligence.

How can a trustee avoid liability?

By acting transparently, documenting all decisions, seeking professional advice when necessary, and following both the trust’s terms and the Probate Code.

Originally Published June 6, 2023