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Trustee Overview

Trustee Responsibilities and Obligations

As a trustee, your responsibilities and obligations are to the trust document. A trust is a binding legal contract. Trustees are fiduciaries – by law, they have a legal duty to comply with the trust instructions. The trustee should act prudently at all times for the benefit of the trust beneficiaries.

Now, let’s review the instructions for a Trustee in the event of the following:

  1. A physical or mental incapacity
  2. At death

Trustee Responsibilities and Obligations

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In California, the property of a deceased person should go through probate before passing to new owners. California law provides for creating Trusts that can distribute assets and property after the owner’s death. The purpose of the Trust is to distribute assets to the beneficiaries. The significant advantage of the Trust is to avoid the expense and uncertainty of probate proceedings in court. 

Trusts offer the following benefits.

 • Precise control of property distribution 

 • Ensuring property goes as the owner intended 

 • Avoiding the time, risk, and expense of probate proceedings.

California Trust Law and Trustee Duties

California laws place duties on every trustee. They should carry out the terms of the trust document and stay within the boundaries of California law. California trustee duties apply to every trustee. The scope and application of trustee responsibilities and obligations depend on the Trust and the beneficiaries’ overall situation. Legal advice can support the trust administration and provide valuable assistance at every stage. 

 

Many situations suggest the need for advice from an experienced trust attorney. They include the need to defend the legal interest of the Trust, avoid losses, and manage assets located outside of the state of California. Expert legal help can support a successful administration and avoid time-consuming issues.

Powers of a Trustee

The trust document is a relatively simple arrangement. A person called a grantor creates the Trust by a legal document. The terms place assets under the control of the Trust. The trustee manages the Trust. Usually, the first or original trustee is the grantor. 

The Trust gives the following:

  • Legal title to the assets to the trustee. 
  • The Trust gives beneficial ownership to the beneficiaries. 
  • The beneficiaries receive the trust assets. 

Trustee Responsibilities and Obligations

A California trustee’s legal obligations come from California trust law and trustee duties in the trust document. California law sets out a trustee’s responsibilities, and the rules apply to every Trust and trustee. 

The below-listed items describe the duties and responsibilities of trustees under the California Probate Code.

  • Loyalty to the Beneficiaries- The law requires a duty of loyalty. Trustees should always act in the interests of the beneficiaries. This duty may be complicated when there are two or more beneficiaries. 

  • Personal Interests – A trustee should always pursue the beneficiaries’ interests and avoid conflict with personal interests. A conflict of interests with the Trust interferes with the duty of loyalty owed to the beneficiaries.

  • Remain Impartial – A trustee should remain impartial to the beneficiaries. When trusts have more than one beneficiary, a trustee should manage the assets in ways that do not favor any beneficiary. This duty is consistent with the obligation to act in the interests of the beneficiaries.

  • Information – Trustees have a duty of disclosure that runs in favor of the beneficiaries. The trustee should provide information that beneficiaries need to protect their interests in the trust assets.

  • Duty to Perform Duties – The trustee should perform duties and not delegate their powers to other people or entities. A trustee may hire experts to perform duties outside of their capabilities, including retaining expert legal advice.

  • No Mixing Assets – The trustee cannot mix Trust and personal assets. The trustee should always work for the benefit of the Trust, and he or she should avoid self-dealing an appearance of self-dealing.

  • Defend the Trust – The trustee has a legal duty to enforce the Trust’s rights. A trustee should defend claims against the Trust and enforce obligations owed to the Trust. While the law does not require defense or pursuit of all claims, a trustee should act reasonably and avoid losses.

Breach of Duty

When a trustee fails to act or poorly performs the trust document’s tasks, the beneficiary may have a right to demand actions. California trust law trustee duties include the trustee responsibilities and obligations required by the California Probate Code. The fiduciary duties of trustees also include following the grantor’s instructions in the trust document. 

 Beneficiaries can act to enforce their rights under the Trust. The failure to perform duties and obligations can create a risk of personal liability for the trustee. California trustees can retain legal counsel to assist and advise them as they carry out the trust terms. This advice can help remedy issues that develop and avoid problems in trust administration.

One Size Does Not Fit All

There is no simple formula for a successful trust administration. The legal responsibilities of trustees depend on the circumstances of the Trust. Interpreting the role of a California trustee can be complicated, technical, and challenging. Some trusts will offer unique challenges; for example, the assets include real property, sales of assets, and leases. Real property may be located both within and outside of the state of California, and other state rules may apply.

  At every trust administration stage, California trustees benefit from a seasoned trust attorney’s advice and assistance. Trustees benefit from an initial consultation to review the duties and obligations. An attorney’s ongoing relationship can help guide trust administration and keep it on a smooth administration course.

Responsibilities of a Trustee at physical incapacity

  1. Contact the attorney who prepared the trust document. Get a copy of the trust document and review it for specific instructions. You will need to have the appropriate letter from a physician and maybe two or more specialists to document the person’s condition.
  2. Notify banks and other institutions that you are now the trustee of the person. Each institution may have different requirements but can count on showing them the following:

⇒ Copy of the doctor(s) letter.

⇒ Trust document

⇒ Personal identification

  • Take inventory of all property, especially real estate. Get all keys, maintenance crews if applicable, and continue to maintain any utilities, etc.
  • Make a list of all current debts, and transact any business of the incapacitated person. Keep a ledger of all debts paid and any income received.
  • If there are back-up trustees, keep them informed at all times.

Responsibilities of a Trustee at death

  1. Inform the family of your position as the trustee and assist as needed with the funeral arrangements, flowers, cemetery marker, special wishes for service, etc., and update friends and family members.
  2. Give copies of the trust document to all beneficiaries described in the trust.
  3. Order at least 12 certified death certificates which the funeral home can assist. Essential for transferring titles, etc.
  4. Contact the estate planning attorney and update them should you have any questions or concerns.
  5. Notify the banks. Again you will need documents to gain access to the accounts like the following:
  1. Certified copy of death certificate
  2. Trust document
  3. Personal identification
  • Get ahold of all agencies like the following who provide a death benefit
  1. Social Security
  2. Life Insurance companies
  3. Retirement plans
  1. Take note: Put these into an interest-bearing account until distribution.
  • Secure all real property, jewelry, collector items, cars, etc. and maintain all keys. Take inventory.
  • Through bank records, determine all accounts payable and receivables and start a ledger. Pay all bills and taxes.
  • Income taxes: Contact an accountant to prepare the final income taxes and any other estate tax an inheritance tax returns.

After paying debts and taxes, complete the final accounting record of all assets and bills paid. Send a copy to all beneficiaries. Keeping transparent is critical. 

Finally, make sure you get a signed receipt from all beneficiaries stating they received their property.

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