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By: Scott Grossman on June 17th, 2022

Why is it important to manage a trust property productively?

Do you have a trust and are concerned your Trustee has not been productively controlling your trust property? Do you feel your Trustee is not working in your best interest to productively manage your trust property? You may have good reason to think that way. And it is your right as a beneficiary to know your Trustee is representing you and your trust property. 

Not knowing your rights as a beneficiary and a Trustee’s duties to not breach their fiduciary duty can ultimately leave your Trust at risk. 

For a Trustee to do their role effectively, one of the main things they must do is manage trust property productively, but what exactly does that mean? And how, as a beneficiary, can you assure your Trustee is doing everything in their power to manage your trust property productively? 

Here at The Grossman Law Firm, we have been informing our clients about their rights as a beneficiary, how to remove unqualified Trustees, and helping them receive their entire Trust payout. 

In this article and video, you will learn: 

  • What does productively managing trust property entail?  
  • What does not productively managing Trust property look like? 
  • Why is it important for your Trustee to manage trust property productively?
  •  What are your next steps moving forward?

What does productively managing trust property entail?  

If you have trust property that is sitting idly by not making money or being used productively. Your Trustee might not be managing trust property productively. 

It is one of the main responsibilities of a Trustee to manage trust property productively, as they must follow and stick to the objective of the Trust. So, what does that mean? 

So, for instance, if you have real estate property in a Trust that can be rented. Then it needs to be rented. And if you have cash in a bank account, it needs to be invested. Or, if you have a car that no one drives, it should be sold. 

It means that the Trustee must act following the Trust, and if they are not, they are not doing their job correctly. Let us look at an example of a Trustee not managing Trust property productively. 

For example, a trust that owns a single-family house and calls outright for distribution, but after a year of administration, the Trustee has not done much managing the trust property or making the Trust ready for distribution. They are not productively managing Trust property. 

Under these circumstances, the beneficiaries can rightfully complain the Trustee has breached their fiduciary duty by failing to rent the house for the year of Trust administration and for what appears to be an unknown length of time until the Trust is ready for distribution. That means that the Trustee was not sticking to the objective of the Trust or not managing the Trust property productively, increasing the Trust’s value. And this is grounds for removal of them as a Trustee. 

What does not productively managing Trust property look like? 

Still confused? Here is another example, one of the more common instances of a Trustee not managing Trustee property productively occurs in an A-B trust.

When the first partner of the married couple dies. The B trust typically says all income will go to the surviving spouse. And upon the death of the surviving spouse, the children will inherit the property in the B trust. 

In this scenario, the Trustee needs to make appropriate investment decisions so that there is both an income to distribute to the surviving spouse while they are alive and the underlying assets grow in value over time to preserve the Trusts value for the children who will ultimately inherit from Trust B. 

If your Trustee has not done this, meaning there is no income to distribute to the surviving spouse while they are still alive, not investing and growing the assets in value, or preserving the Trusts value for the children. They are not doing their duty as a Trustee. Therefore, they can be subject to removal.

Why is it important for your Trustee to be productive with trust property?

A Trustee must invest and make the trust property productive through prudent investments. If a Trustee fails to do this, they are at fault for breaching their fiduciary duty. That means that the Trustee must invest and manage trust assets as a prudent investor would. This means  managing  the Trust with care and intent, aligning with the goal or objective of the Grantor.  

And any breach of a Trust can ultimately affect how much money you receive in the long term. If a Trustee has not been productively handling your trust property and assets, your Trust may be at risk, and you might not receive your full payout. 

What are your next steps moving forward? 

If your Trustee has not been productively handling trust property, here are a few steps you should do to make sure your Trust is not being affected. If your Trustee is breaching their fiduciary duties, you must take action as soon as possible. 

Know the basics of proper trust administration

If you would still like some more information on Trust Litigation and removing a trustee, check out our complete Overview of California Trust Litigation, available on our website. And if you have more questions about your rights as a beneficiary and what you should know moving forward. Please review our articles on the Beneficiary’s Rights in California and Removing a Trustee in California

If you are still having some trouble, have any more questions, or want to talk to someone about your case, please give us a call or fill out our Get Help Now form.

If this is in line with what’s happening to you, it’s best to reach out as soon as possible. The longer you take, the more damage your Trust could take. Please call us at (951) 683-3704, and we would be more than happy to see if we can assist you.