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Trustees Duty of Revocable Trust

Under California Probate Code section 15800, a Trustee of a revocable Trust only owes duties to the person who has the power to revoke, so long as that person is living and has capacity. That means if you are the beneficiary under a revocable Trust, you do not have the rights normally given to Trust beneficiaries until AFTER the person holding the power to revoke either becomes incapacitated or dies.

The reason behind this rule is fairly simple: if the Trust can be changed, amended, or revoked, why bother enforcing it? Since the person holding the power to revoke can either fix the problem, or terminate the Trust altogether, there is little reason to allow beneficiaries any rights.

That works fine in theory, but not so great in practice. The biggest problem with this rule is that there are times when a beneficiary needs to protect the Trust. Especially where the capacity of the Settlor is questionable.

For example, if your parent creates a revocable Trust, and then starts to lose capacity, he or she may be susceptible to abuse by a child, caretaker, or neighbor. But before you can take any action against the Trust or the Trustee, you first must convince the Court that your parent lacks capacity. That is an extra hurdle that can be difficult to overcome.

You could try to obtain conservatorship over your parent and then challenge the Trust abuse as Conservator, but that opens a new can of worms to deal with. Your parent may be angered that you file a conservatorship against then, the Court may not grant a conservatorship if a Trust is already in place, or the Court may decide that your parent is not in need of a conservatorship. Add to that the cost, time commitment, and public spectacle of conducting a conservatorship action in Court.

The power given to Trust Settlors is necessary and important, but it can also lead to some unintended consequences. No one said being a Trust beneficiary was easy….