You can sum up a California Trustee’s duty of care in one word: Reasonable. Well that sounds…reasonable.
To be precise, California Probate Code section 16040(a) states the standard of care this way:
The trustee shall administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument.
Reasonable care, skill, and caution of a prudent person seems like a great standard and one that can be fairly easily followed by most Trustees. Yet, so many private Trustees seem to violate this standard in a big way.
For starters, the standard does not provide a bright-line rule for Trustees to follow. Instead, it presumes that reasonable care, skill, and caution will mean different things under different circumstances. That’s one of the benefits of a reasonableness standard—flexibility.
But flexibility has its downsides because what may seem reasonable to the Trustee may not be reasonable at all. This is especially true where a sibling is acting as Trustee and refuses to deal fairly with the Trust beneficiaries. The Trustee may think they are acting reasonably given the past history between the siblings, but objectively the Trustee may be way off the mark.
It is important to know and understand your duties as a Trustee. Most Trustees would prefer NOT to be sued. And if you want to avoid trouble, it is best to stick to the reasonableness standard. How do you know what is reasonable? You ask. As Trustee, you are entitled to hire and obtain advice from professionals—lawyers, accountants, financial planners, etc. By seeking professional advice you can take into account what would normally be done in a similar situation as yours.
And then apply that advice fairly. Even where beneficiaries are difficult or refuse to cooperate, fairness must be employed by the Trustee. No one said being a Trustee is an easy job; it may be one of the most thankless jobs you can have. But a little reasonableness, and fairness, can go a long way to protecting yourself as Trustee.
As for those beneficiaries dealing with an unreasonable Trustee, it may be time to take action to protect yourself and your rights as a beneficiary. Once a Trustee decides to ignore his duties, it rarely gets better for the beneficiary. The obvious option is to seek removal of the Trustee, but that can be a difficult pursuit. The less obvious option is to seek a court order requiring the Trustee to take certain actions—whatever actions you need to protect the Trust and your beneficial share.
Every beneficiary has options when dealing with a bad Trustee. It is not always easy to take action, but it is often necessary.