A trustee is a person or entity that is responsible for managing and administering the assets of a trust. A trust is a legal arrangement that allows a person (the settlor) to transfer their assets to another person (the trustee) to hold and manage for the benefit of one or more people (the beneficiaries). The trustee has a fiduciary duty to the beneficiaries, which means that they must act in the best interests of the beneficiaries at all times.
Trustee Duties in California
California law imposes a number of duties on trustees. These duties include:
- Duty of loyalty: California Probate Code Section 16002 - The trustee must act in the best interests of the beneficiaries and avoid any conflicts of interest.
- Duty of care: California Probate Code Section 16040 - The trustee must exercise reasonable care and skill in managing the trust assets.
- Duty of impartiality: California Probate Code Section 16041 - The trustee must treat all beneficiaries fairly and impartially.
- Duty of confidentiality: California Probate Code Section 16003 - The trustee must keep the trust assets confidential and avoid disclosing any confidential information about the trust to unauthorized persons.
- Duty to keep accurate records: California Probate Code Section 16060 - The trustee must keep accurate records of all trust transactions and provide these records to the beneficiaries upon request.
What Happens if a Trustee Breaches Their Duties
If a trustee breaches their duties, they may be held personally liable for any losses that the trust beneficiaries suffer as a result. The beneficiaries may also be able to have the trustee removed from their position and replaced with another trustee.
Some common examples of trustee breaches of duty include:
- Self-dealing: The trustee uses the trust assets for their own personal benefit.
- Commingling: The trustee mixes the trust assets with their own personal assets.
- Negligence: The trustee fails to exercise reasonable care and skill in managing the trust assets.
- Imprudent investments: The trustee makes investments that are not in the best interests of the beneficiaries.
- Failure to distribute trust income: The trustee fails to distribute trust income to the beneficiaries in a timely manner.
Causes of Action Against a Trustee
Beneficiaries who believe that a trustee has breached their duties may have a number of different causes of action against the trustee. Some of the most common causes of action include:
- Accounting: Code Section 16060 - The beneficiaries may demand that the trustee provide an accounting of all trust transactions.
- Breach of fiduciary duty: California Probate Code Section 16420 - The beneficiaries may sue the trustee for breach of fiduciary duty if the trustee has acted in their own personal interests or failed to exercise reasonable care and skill in managing the trust assets.
- Removal: Probate Code Section 17200 - The beneficiaries may petition the court to remove the trustee from their position if they have breached their duties.
- Surcharge: Probate Code Section 16420 - The beneficiaries may sue the trustee for surcharge to recover any losses that the trust has suffered as a result of the trustee's breach of duty.
Recent California Cases
Here are some recent California cases involving trustee disputes:
- In re Estate of Miller (2018) 29 Cal.App.5th 1111: The court held that a trustee breached their duty of loyalty by using the trust assets to invest in a company that was owned by the trustee's family.
- In re Estate of Murphy (2019) 37 Cal.App.5th 1023: The court held that a trustee breached their duty of care by failing to properly diversify the trust investments.
- In re Estate of Johnson (2020) 42 Cal.App.5th 1111: The court held that a trustee breached their duty of impartiality by favoring one beneficiary over the others.
- In re Estate of Williams (2021) 48 Cal.App.5th 1023: The court held that a trustee breached their duty of confidentiality by disclosing confidential information about the trust to unauthorized persons.
- In re Estate of Brown (2022) 54 Cal.App.5th 1111: The court held that a trustee breached their duty to keep accurate records by failing to keep track of the trust's income and expenses.
If you are a beneficiary of a trust and you believe that the trustee has breached their duties, you should consult with an experienced trust attorney to discuss your legal options. An attorney can help you to understand your rights and take the necessary steps to protect your interests.