What Is a Trustee and What Duties Does a Trustee Owe?

A trustee is the person or institution that holds legal title to trust assets and administers them for the beneficiaries under the terms of the trust instrument. In California family trusts, the trustee is often a surviving spouse, an adult child, or a private fiduciary who steps in after the person who created the trust dies or loses capacity.

The Probate Code, beginning at section 16000, imposes a demanding catalog of duties: administer the trust according to its terms, stay loyal to the beneficiaries, avoid conflicts and self-dealing, treat multiple beneficiaries impartially, keep trust property separate and identified, invest prudently, and keep beneficiaries reasonably informed, including through formal accountings. A trustee who profits personally from the position, favors one beneficiary improperly, or lets assets languish faces surcharge, removal, and in bad cases double damages under the financial elder abuse statutes.

Most trust litigation is, at bottom, about trustees: beneficiaries who suspect the trustee of taking or mismanaging, and trustees defending judgment calls made in an impossible family. Both sides live and die by the records.

The Core Duties

The Probate Code sets out a demanding catalog. The trustee must administer the trust according to its terms, act solely in the interest of the beneficiaries, deal impartially where there is more than one beneficiary, avoid conflicts of interest and self-dealing, keep trust property separate and clearly identified, make trust property productive, and refrain from delegating what the trustee should personally perform.

The duty of loyalty is the strictest. A transaction in which the trustee has a personal interest is generally voidable by a beneficiary without any showing that the price was unfair, which is why trustees who buy trust assets themselves, even at appraised value, so frequently end up in court.

Information Rights and the 60 Day Notice

On the death of the settlor of a revocable trust, or when a revocable trust becomes irrevocable, the trustee generally must serve notification on the beneficiaries and on the settlor's heirs within sixty days, and must provide a complete copy of the trust terms on request.

That notification carries real consequences. It starts a limitations period, commonly one hundred twenty days from service, within which a beneficiary must bring a trust contest. A trustee who never serves it leaves the contest window open indefinitely, which is usually the opposite of what the trustee wanted.

Compensation, Removal, and Surcharge

A trustee is generally entitled to reasonable compensation if the trust does not specify an amount, and to reimbursement for expenses properly incurred in administration. Compensation is a frequent flashpoint where the trustee is also a beneficiary.

A court may remove a trustee for breach of trust, insolvency, unfitness, hostility that impairs administration, excessive compensation, or where removal is otherwise in the beneficiaries' best interest. Beyond removal, a trustee who breaches can be surcharged, meaning held personally liable for the loss, the profit the trust would have made, or any profit the trustee made. See our trust litigation page.