Understanding the Role of a Trustee

A trustee is responsible for managing trust assets and carrying out the terms of the trust.

After the creator of a revocable living trust dies, the successor trustee generally takes control of trust administration.

Trustees have significant legal responsibilities and are required to act in the best interests of the beneficiaries.

The Duty to Follow the Trust

One of the trustee’s primary responsibilities is to follow the instructions contained in the trust document.

This may include:

• identifying beneficiaries;

• managing trust assets;

• paying debts and expenses;

• and distributing property according to the terms of the trust.

Trustees do not have unlimited discretion and generally must administer the trust according to its written terms.

The Duty of Loyalty

California trustees owe a fiduciary duty to the trust beneficiaries.

This means trustees must act in the best interests of the beneficiaries and avoid conflicts of interest whenever possible.

A trustee generally may not:

• use trust assets for personal benefit;

• favor one beneficiary over another without authority;

• or engage in self-dealing transactions.

Trustees are expected to place the interests of the beneficiaries above their own personal interests.

The Duty to Protect Trust Assets

Trustees are responsible for preserving and protecting trust property.

Depending on the assets involved, this may include:

• maintaining real estate;

• safeguarding financial accounts;

• collecting income;

• and ensuring trust property remains properly insured.

Trustees are expected to exercise reasonable care when managing trust assets.

The Duty to Keep Beneficiaries Informed

California law requires trustees to provide certain information to beneficiaries.

This may include:

• notice of trust administration;

• information regarding trust assets;

• accountings;

• and updates regarding administration activities.

Keeping beneficiaries reasonably informed can help reduce misunderstandings and disputes.

The Duty to Maintain Records

Trustees should maintain accurate records regarding trust administration.

Important records often include:

• bank statements;

• receipts;

• tax filings;

• property records;

• and documentation of distributions.

Accurate recordkeeping helps demonstrate that trust assets have been managed appropriately.

The Duty to Pay Valid Debts and Expenses

Before distributing assets, trustees often must address certain financial obligations.

Depending on the circumstances, this may include:

• funeral expenses;

• taxes;

• creditor claims;

• and administration expenses.

The specific obligations depend upon the nature of the trust assets and the circumstances of administration.

The Duty to Distribute Trust Assets

Once administration has progressed sufficiently, trustees generally distribute trust assets according to the trust terms.

The timing of distributions depends on factors such as:

• the complexity of the estate;

• tax considerations;

• creditor issues;

• and the instructions contained in the trust.

Trustees should avoid unnecessary delays while also ensuring administration is completed properly.

What Happens If a Trustee Fails to Perform These Duties?

Beneficiaries may have legal remedies when a trustee fails to fulfill fiduciary obligations.

Potential issues may include:

• failure to communicate;

• unreasonable delays;

• improper distributions;

• self-dealing;

• or mismanagement of trust assets.

The available remedies depend on the specific facts involved.

Understanding Trustee Responsibilities

Serving as a trustee can be a significant responsibility.

Trust administration often involves legal, financial, tax, and practical considerations that require careful attention.

Understanding a trustee’s duties can help both trustees and beneficiaries navigate the administration process more effectively.