Being asked to serve as trustee for a friend or loved one is an honor. It reflects confidence in your judgment and integrity and can provide great reassurance that a person’s wishes will be carried out. But accepting the job also means accepting significant legal responsibilities.
A trustee is a fiduciary, and California’s Probate Code provides a laundry list of duties and obligations that must be followed. Failure to comply can result in a breach of trust and, in some circumstances, personal liability.
Among the most important responsibilities is the duty of loyalty. A trustee must administer the trust in the interests of the beneficiaries and according to the terms of the trust. Personal interests and family relationships cannot interfere with those responsibilities.
A trustee must also avoid self-dealing. Using trust property or the trustee’s position for personal benefit can subject the trustee and the transaction to close scrutiny, even when the trustee believes the transaction is fair.
Another important obligation is the duty to keep beneficiaries reasonably informed about the administration of the trust. Trustees should maintain good records, respond appropriately to requests for information, and provide reports and accountings, when required. A lack of communication can quickly create mistrust and conflict.
When there are multiple beneficiaries, the trustee also has a duty of impartiality. The trustee cannot favor one beneficiary simply because of a closer personal relationship. Instead, the trustee must consider the respective interests of all beneficiaries in accordance with the terms and purposes of the trust. These are only a few of the many duties imposed upon trustees.
So, what should a trustee do when faced with a difficult decision or uncertainty about a proposed action? Ask for permission, not forgiveness. California’s Probate Code permits a trustee to seek guidance from the Probate Court through what is commonly called a Petition for Instructions. Obtaining the court’s “blessing” before taking a questionable or controversial action may help avoid costly litigation later.
Serving as trustee can be fulfilling and provide peace of mind to friends and loved ones who want their trust carefully managed according to their wishes. However, good intentions alone are not enough.
A trustee should seek experienced legal counsel throughout the administration to understand the trust, comply with fiduciary obligations, and avoid inadvertently committing a breach that could lead to unwanted, expensive, and stressful litigation.
Being a trustee is more than an honor; it is a job. Be informed, be careful, and be prepared.
Law Offices of Cheryl L. Walsh, APC
949.240.9003 / Cheryl@WalshSeniorLaw.com
27282 Calle Arroyo, Suite 200, San Juan Capistrano, CA 92675
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