TrustTrust LitigationTrustee Duties

What is a Fiduciary Duty? 

By March 3, 2026No Comments
What is a Fiduciary Duty

Table of Contents

Key Takeaways

What Is a Fiduciary Duty?

Fiduciary Duty in California Trust Matters

Core Fiduciary Duties Under California Law

What a Trustee Cannot Do

Consequences of Breaching a Fiduciary Duty

FAQ

Related Resources

How The Grossman Law Firm Can Help

Key Takeaways

  • California law holds trustees to a high standard of loyalty— known as a fiduciary duty.
  • The California Probate Code spells out what that duty requires, including loyalty, prudent asset management, disclosure, and formal accountings.
  • Beneficiaries may ask the court to intervene if those duties are violated.

What Is a Fiduciary Duty?

A fiduciary duty means a trustee must put the beneficiaries first and handle the trust with honesty, loyalty, and sound judgment — not personal interest.
Under California law, fiduciary relationships arise when one party places significant trust and confidence in another. The fiduciary must then put the beneficiary’s interests ahead of their own. This is not a casual obligation. It is the law and enforceable in court.
The Grossman Law Firm represents beneficiaries all across California when trustees fail to meet their obligations. TGLF steps in to help. Attorney Scott Grossman is a litigation attorney focusing exclusively on probate and trust litigation, helping heirs and beneficiaries protect their rights.

Fiduciary Duty in California Trust Matters

In trust and estate administration, fiduciary duties are largely governed by the California Probate Code.
For trustees, duties are outlined in sections 16000 through 16420 of the CA Probate Code.
These duties are mandatory. Trustees cannot disregard them due to inconvenience or complexity. Accepting the fiduciary role means accepting legal responsibilities with real consequences.
Beneficiaries should understand the specific requirements of these duties.

Core Fiduciary Duties Under California Law

Duty of Loyalty

When a Trustee Puts Personal Interests Ahead of the Beneficiaries

The duty of loyalty sits at the heart of every trustee’s responsibilities. Under California Probate Code section 16002, a trustee must manage the trust solely for the benefit of the beneficiaries.

In practical terms, that means the trustee cannot:

  • Use trust assets for personal gain

  • Engage in self-dealing

  • Enter transactions that create undisclosed conflicts of interest

A trustee, for example, cannot sell trust property to themselves at a discount or borrow trust funds unless the trust expressly allows it and the transaction is handled properly. Even if a deal looks reasonable on the surface, it can still violate the law if the trustee failed to fully disclose a conflict.

California courts take loyalty violations seriously. If a trustee benefits from improper conduct, the court can order them to repay the trust and may impose additional financial consequences.

Duty of Care (Prudent Administration)

The Prudent Investor Rule in California

Under Probate Code section 16040, a trustee must administer the trust with reasonable care, skill, and caution. This includes a duty to invest and manage trust assets prudently under the California Uniform Prudent Investor Act.
In practical terms, this means:
  • Diversifying investments when appropriate
  • Avoiding speculative or reckless decisions
  • Preserving trust property
  • Acting as a reasonably prudent person would under similar circumstances
A trustee who leaves large sums in a non-interest-bearing account for years, or who makes high-risk investments without justification, may be violating this duty.
Beneficiaries are entitled to expect thoughtful, informed management rather than guesswork.

Duty to Inform and Account

Transparency is required.
Under Probate Code section 16060, a trustee has a duty to keep beneficiaries reasonably informed about the trust. Section 16062 requires trustees to provide formal accountings at least annually, upon a change of trustee, and upon termination of the trust (unless properly waived).
An accounting must include:
  • Assets on hand
  • Receipts and disbursements
  • Gains and losses
  • Trustee compensation
  • Distributions
If a trustee refuses to provide information or delays accountings for years, beneficiaries can petition the probate court to compel a report.
A lack of openness and communication is often the first indication of a problem.

Duty of Impartiality

When a trust has more than one beneficiary, California Probate Code section 16003 requires the trustee to act impartially. That does not mean everyone gets the exact same treatment. It means the trustee must balance competing interests fairly and follow the terms of the trust.

For instance, if one beneficiary is entitled to current income and another will receive what remains later, the trustee must manage investments with both interests in mind.

Problems arise when a trustee favors one beneficiary over another — particularly if the trustee is also a beneficiary. Even subtle favoritism can create legal exposure if it unfairly shifts benefits or ignores the trust’s instructions.

What a Trustee Cannot Do

Red Flags That May Signal a Breach of Fiduciary Duty

When fiduciary duties are taken seriously, certain conduct clearly crosses the line. A trustee cannot:
  • Use trust property for personal expenses
  • Ignore the written terms of the trust
  • Delay distributions without a legitimate reason
  • Conceal financial information
  • Commingle trust funds with personal funds
  • Make gifts to themselves unless expressly authorized
Even in family trusts, the rules apply. Being a sibling or close friend does not reduce legal responsibility when acting in a fiduciary capacity.
If a trustee engages in self-dealing, neglects investments, or refuses to communicate, beneficiaries have the right to seek court oversight.

Consequences of Breaching a Fiduciary Duty

Removal and Replacement of the Trustee

When a fiduciary breaches their duties, California courts have broad authority to impose remedies under Probate Code section 16420.
Possible consequences include:
  • Surcharge (repayment of financial losses to the trust)
  • Disgorgement of profits gained through improper conduct
  • Removal and replacement of the trustee
  • Denial or reduction of trustee compensation
  • Attorney’s fees and costs in appropriate cases

Delays Can Limit Your Legal Remedies

In serious situations involving bad faith, courts may impose additional financial penalties.
Timing matters. While some trust claims may be subject to statutes of limitation tied to accountings or notice, delay can complicate recovery. If you suspect misconduct or that someone is not 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

Can a beneficiary remove a trustee?

Yes, a beneficiary may seek removal (under Probate Code section 15642) if the trustee has committed a breach, is unfit to administer the trust, or removal is best in the interests of the beneficiaries.

Is poor communication alone a breach?

Not always. However, failure to provide legally required information or accounting can constitute a violation.

Can a trustee be personally liable?

Yes, trustees can be held personally liable for losses caused by their breach of fiduciary duty.

Learn More About Enforcing Your Rights as a Beneficiary

How The Grossman Law Firm Can Help

Fiduciary duties exist to protect beneficiaries. When those duties are ignored, the law provides remedies, but you must assert your rights.
At The Grossman Law Firm, we help beneficiaries throughout California enforce 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 cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Originally Published Dec 7, 2023