A Trustee’s Fiduciary Duty: What Is in Your Best Interest?

When you create a living trust, one of the most important decisions you make is choosing your successor trustee — the person or institution that will manage the trust if you become incapacitated or after your death. Your trustee isn’t just a manager; they are bound by what’s known as a fiduciary duty, a legal and ethical obligation to act in the best interest of the trust’s beneficiaries.

Most living trusts name the creators of the trust (often called the trustors or settlors) as the primary beneficiaries during their lifetimes. This means that while the trustors are living, the successor trustee must make every decision based on what is in their best interest before considering the needs of any other beneficiaries.

A fiduciary duty exists to protect beneficiaries and ensure that the trustee handles trust matters honestly, prudently, and transparently. Both the trust document and California law define these duties clearly, and they include:

• Duty of Loyalty – The trustee must always act solely in the interest of the beneficiaries and avoid any conflicts of interest.
• Duty to Account and Report – Trustees are generally required to provide an annual report or accounting to beneficiaries detailing all trust income, expenses, and distributions.
• Duty of Care and Prudence – Trustees must manage trust assets with the same care, skill, and caution that a prudent person would use under similar circumstances.

If you are a beneficiary and believe that a trustee is not fulfilling these obligations, you have the right to request an accounting, demand corrective action, or, in serious cases, petition the probate court to suspend or remove the trustee. Because these issues can be complex, it’s important to seek the guidance of an attorney experienced in trust and estate litigation. In many cases, disputes can be resolved through negotiation, but others may require court involvement to ensure the trust is properly administered.

Selecting a responsible and trustworthy trustee is one of the most important parts of estate planning. The right trustee will carry out your wishes, protect your legacy, and ensure your loved ones are treated fairly. If you would like to discuss your successor trustee options or review your current estate plan, please contact Bryant Elder Law at (408) 286-2122 or visit BryantElderLaw.com.

All materials have been prepared for general information purposes only to permit you to learn more about our firm, our services and the experience of our attorneys. The information presented is not legal advice, is not to be acted on as such, and may be subject to change without notice.