Table of Contents
Key Takeaways
- A Trustee in California is held to strict standards under the California Probate Code. Also known as a fiduciary duty.
- A trustee’s duties focus on loyalty to the beneficiaries.
- Good intentions do not justify poor administration, delay, or mismanagement.
- Beneficiaries have rights when a trustee fails to comply with the law.
- Probate court intervention might be required to compel compliance or remove a trustee.
Trustee in California
In practice, a trustee is a person or entity appointed to manage trust assets on behalf of beneficiaries. In California, that role carries major legal responsibility. Trustees hold legal title to trust property. Though they do not own it for personal use. Every action must be taken for the benefit of the beneficiaries and in accordance with the trust’s terms and California law.
As a result, understanding trustee duties is critical for both trustees and beneficiaries. Trustees who misunderstand their role can unintentionally break the law. Beneficiaries who do not understand trustee obligations may miss warning signs that something is wrong.
At The Grossman Law Firm, we regularly see disputes arise not from fraud, but from confusion, delay, or failure to follow basic fiduciary rules. The longer you wait, the more your inheritance can be at risk.
The Legal Framework of Trustee Duties
Fiduciary Duty Under California Law
California law governs trustee duties through the Probate Code and long-standing fiduciary principles developed by the courts. Together, these rules form a framework designed to protect beneficiaries and preserve trust assets.
At the center of California trust law is fiduciary duty. A trustee must place beneficiary interests above everything else. This obligation applies at all times and cannot be set aside for convenience, family dynamics, or a trustee’s personal sense of what seems fair.
Furthermore, courts evaluate trustee actions rather than intentions. In California, a breach of a fiduciary duty does not require malicious intent.
Fiduciary Duties Every California Trustee Owes
Duty of Impartiality
When a trust has multiple beneficiaries, a trustee has a fiduciary duty to act fairly. The duty of impartiality means treating them ethically. This does not mean or require identical treatment. For a trustee, acting impartially means dealing with competing interests fairly. Additionally, in accordance with the trust’s terms.
Favoritism, unexplained delays, and unequal treatment are common reasons beneficiaries end up in disputes.
For more information on the duty of impartiality, take a look at our article, “Trustee Duties: Can Trustees Treat Beneficiaries Unequally?” which explains when unequal treatment may be allowed and when it is not.
Duty of Prudence
Trustees must manage trust assets with reasonable care, skill, and prudence. Further, this includes adhering to California’s Prudent Investor Rule by thoroughly researching investments, avoiding excessive risk, and seeking professional advice when appropriate. Trustees should manage assets as a prudent investor would under similar circumstances.
For example, prudence involves:
- Evaluating risk
- Expanding investments when appropriate
- Monitoring performance
- Making well-informed decisions, not passive ones
For more information on the prudent investor rule, take a look at our article, “Trustee’s Duty: What is the Prudent Investor Rule?” for a more in-depth look at a trustee’s duties.
Duty of Loyalty
The duty of loyalty requires trustees to act solely in the interests of the beneficiaries. Trustees must avoid conflicts of interest. Further, they may not engage in self-dealing unless the trust expressly permits it and all legal requirements are met.
This duty is frequently violated when trustees:
- Use trust assets for personal benefit.
- Favor one beneficiary over another without authority.
- Transactions that benefit themselves or related parties.
For more information on the duty of loyalty, take a look at our article, “Trustee’s Duty: Duty of Loyalty,” for a more in-depth look at a trustee’s duties.
Responsibilities During Administration
Managing and Defending Trust Assets
Trustees must take control of trust property, protect it, and verify that it is properly titled in the trust’s name. If a trustee fails to secure assets, the court may hold the trustee liable.
Record-Keeping and Accountings
Accurate records are not optional. Trustees must keep accurate documentation of income, expenses, investments, and distributions. California law also requires trustees to provide accountings at certain intervals or upon request.
Poor record-keeping often becomes a major issue in trust litigation.
Communication With Beneficiaries
Keeping beneficiaries informed is not optional. California law requires trustees to respond to reasonable questions, provide required notices, and disclose information that affects a beneficiary’s rights under the trust.
Trustee Authority and Discretion
Limits on Trustee Authority
While trustees have the authority to manage trust assets, their discretion is not unlimited. When making decisions on behalf of beneficiaries, trustees must comply with the trust’s terms and California law.
In practice, trustee authority comes from:
- The trust document
- California law
Discretion must still be exercised reasonably, in good faith, and for proper purposes. A trustee cannot override the trust terms or ignore fiduciary duties simply because the trust grants discretion.
Trustee Compensation and Reimbursement
California law allows trustees to receive reasonable compensation for their services. This also includes reimbursement of expenses incurred during the administration of the trust. The trust document or California law may allow trustees to receive compensation based on a percentage of trust assets or income.
What Happens When a Trustee Fails to Follow the Law
Fiduciary duties are enforceable under California law. When a trustee breaches those duties, probate courts have broad authority to step in and protect beneficiaries. As well as trust assets.
Possible remedies include:
- Surcharging the trustee for financial losses
- Reducing or denying compensation
- Ordering repayment of misused funds
- Removing the trustee
Importantly, beneficiaries do not need to wait until assets are gone before acting. For more information on the severity of breaching a fiduciary duty, check out our article “How Serious Is a Breach of Fiduciary Duty?”
When a Trustee Can Be Removed
In certain circumstances, the court may remove and replace a trustee to protect the trust and its beneficiaries.
The probate court may remove a trustee for:
- A breach of a fiduciary duty
- Incompetence or incapacity
- Conflict of interest
- Failure to communicate or account
- Mismanagement or prolonged delay
Court Procedures
Removing a trustee usually requires filing a petition in the California probate court. Evidence, timing, and proper procedure are critical. These cases are fact-specific and benefit from experienced legal guidance.
If you suspect your trustee isn’t acting in your best interest, don’t wait. Explore “20 Ways Your Trustee May Be Breaching Their Fiduciary Duties” to learn common warning signs and available actions.
FAQ
Are trustees personally liable in California?
Yes, a trustee can be held personally liable for losses caused by a breach of fiduciary duty under California law.
Yes, a trustee can be held personally liable for losses caused by a breach of fiduciary duty under California law.
Can a trustee delay distributions indefinitely?
No, unreasonable delay often violates a trustee’s fiduciary duties, even when no theft or self-dealing occurred.
No, unreasonable delay often violates a trustee’s fiduciary duties, even when no theft or self-dealing occurred.
Can beneficiaries force a trustee to provide information?
Yes. California law gives beneficiaries the right to information and to receive a proper accounting from the trustee.
Yes. California law gives beneficiaries the right to information and to receive a proper accounting from the trustee.
Related Resources
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we help beneficiaries and heirs across California enforce their rights in probate and trust litigation. Attorney Scott Grossman focuses exclusively on these disputes and regularly handles cases involving trustee misconduct, delays, and mismanagement.
Call (888) 443-6590 or fill out our Get Help Now form to take the next step.
Our Intake Specialists can evaluate your case at no cost to you. Qualifying cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Originally Published January 2024