A trustee’s primary responsibility is to manage the trust assets, but this job comes with several obligations. You may want to obtain legal help if you are appointed trustee of a trust so that you can ensure that all of your duties are properly fulfilled.
The scope of a trustee’s duties and powers is governed by the trust document and applicable laws. A breach of trust occurs when the terms of the trust or the law are not followed.
DUTIES OF A TRUSTEE UNDER THE CALIFORNIA PROBATE CODE.
Loyalty to the Beneficiaries.
The trustee must act in the beneficiaries’ best interests. This includes a requirement that the trustee never places his/her interests above those of the beneficiaries. Trustees are prohibited from using their power to gain an advantage at the expense of beneficiaries.
Duty to Avoid Conflicts of Interest:
By avoiding conflicts of interest, the trustee ensures that he or she does not break the duty of loyalty. The trustee therefore must avoid any activity that could lead to self-dealing, conflicts with the trust’s interests, or conflicts with their fiduciary obligations.
A trustee cannot favor one beneficiary over another. The trustee must also act impartially in investing and managing trust property, while at the same time considering the differing interests of the beneficiaries.
Duty of Disclosure.
Trust beneficiaries must be reasonably informed about trust matters, and trustees must disclose all pertinent facts to protect beneficiaries’ interests.
Duty Not to Delegate.
It is against the law for trustees to delegate tasks they are reasonably capable of performing. A trustee also cannot delegate authority to someone else. Note that this obligation does not preclude a trustee from being assisted by an attorney when appropriate.
Duty to Keep Trust Assets Separate.
Trust assets cannot be mixed with the trustee’s own assets. A trustee must identify all trust properties and keep them separate from personal assets.
Duty to Enforce or Defend Claims.
A trustee should identify claims and take appropriate actions to enforce or defend claims as any other prudent trustee would under similar circumstances. To put it simply, a trustee is not supposed to enforce every claim, only those deemed cost-effective and likely to succeed.
A trustee also has to defend claims that could cause the trust to lose money. It is worth noting that if you have been appointed a trustee, you have several tasks to complete, and there is little margin for error. You are best off consulting a legal professional experienced in setting up trusts for a full-proof execution of your trustee duties.
BREACH OF DUTY.
There may be situations in which a beneficiary has a right to demand action against a trustee when he or she has failed to act or performed the tasks of the trust document poorly. This also extends to observing the grantor’s instructions correctly as per the trust document.
Beneficiaries of the trust have a right to enforce their rights under the trust since it was likely established in the grantor’s name for their benefit. If a trustee fails to perform his or her duties and obligations, the court can deem them personally liable.
Legal counsel is available to California trustees in order to assist and advise them in carrying out the trust terms. The advice can be useful for resolving any problems that may arise and preventing problems with trust administration.
PRACTICALITIES OF A TRUSTEE’S DUTY.
When there is a professional trustee, everyone expects regular professional accounting. The problem arises when the trustee is a family member; usually, a parent, who has failed to account and the majority of beneficiaries are not even aware that such a responsibility exists.
In many cases, children learn that much of the inheritance they received was spent, or they are unable to report what happened with what asset between the time when their surviving parent acted as their trustee and the end of their parent’s life.
Sometimes, a trust becomes irrevocable after one parent dies, and accounting is required for the benefit of the eventual beneficiaries – typically the children. As the sole trustee, the remaining spouse is often unaware accounting is due and it would probably be upsetting to find that his or her children may be entitled to an accounting of what the surviving spouse considers as her or his property.
It is possible the children, uncertain of their fate or how the money will be spent, want to ask but fear a breakdown in family relations if they do. A situation of this kind can result in anguish for the entire family if it isn’t handled with discretion and wisdom.
Families are often advised to hold a family conference or enlist the help of a trusted advisor, such as their pastor or lawyer. Doing nothing, however, does not protect the interests of children.
Then there is another scenario, one that doesn’t involve the surviving parent. The problem is made worse by trustees who aren’t their parents, but distant relatives or even strangers. In many cases, successor trustees assume trustee responsibilities when trustees die or are no longer able to perform their duties.
These new trustees may have little knowledge of the beneficiaries, or simply be ignorant of their actual duties. In many cases, they are elderly with little energy to master account-related requirements. A trust lawyer can guide beneficiaries through such scenarios to ensure their interests are protected.
REACH OUT TO US.
You can schedule a consultation with us if a trustee isn’t fulfilling their duties. Our goal is to minimize your stress, reduce personal liability and guide you through an orderly process. Keeping your peace of mind is our primary goal at Klosek Law office.
We also assist trustees in fulfilling their duties. During our initial consultation, we review trustee duties and responsibilities. Having a continuing relationship with an attorney can make it easier to guide and maintain the trust’s administration.