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A Trustee's Duty: Obey the Trust (Anything less could be a breach of fiduciary ... duty)

If you were to crack open a copy of the California Probate Code and start reading from Section 16000 onward, you would find pages of rules discussing the duties of a California Trustee. The first duty, listed at Section 16000, is one of the most important: do what the Trust document tells you to do. Most of the Trustee duties continue in this sensible vein. Trustees have many duties, and most of them are simply common sense. Yet, no matter how much of the Probate Code you read, you will never find a single section that imposes a duty on a Trust beneficiary.

 

Trustees are considered “fiduciaries,” while beneficiaries are not. A fiduciary is anyone who is put in charge of assets belonging to someone else. For example, an agent under a power of attorney is a fiduciary, an Executor under a Will is a fiduciary, a conservator is a fiduciary. Simply put, the Trustee is in the hot seat.

Many Trustees will try to blame the beneficiaries for the Trustee’s bad acts. The Trustee may argue how terrible the beneficiaries are, how the beneficiaries only care about money, how they never respond timely, whatever the excuse. What these Trustees fail to understand is that their duties and obligations apply under California law regardless of the actions of the beneficiaries. Nothing in the California Probate Code relieves a Trustee from their duties because the beneficiaries are being mean (or rude, or difficult).

In most cases, beneficiaries are being “difficult” because the Trustee is not acting appropriately. If you as a Trustee are not following the Trust terms, then there’s a good chance you will have some grumpy beneficiaries on your hands (and rightly so). Same is true if the Trustee is investing poorly, mismanaging Trust assets, failing to make Trust distributions or any other bad actions.

When someone agrees to act as Trustee, they are agreeing to abide by the many duties and obligations required by the Trust document and the California Probate Code. It comes with the job. If you don’t want the responsibility, then don’t be a Trustee. Being Trustee can be a thankless job because you get all the duties, but none of the benefits from the Trust (aside from your pay as a Trustee, which can be fairly small compared to the Trust assets in many cases).

Trustees are expected to act properly, be reasonable, manage the Trust assets well, and follow the Trust terms regardless of the nature of the Trust beneficiaries.