August 21, 2009

Trustee Duties

The following is an overview of the fiduciary duties of a trustee of a trust.

1. Duty to administer trust (Prob C §16000)

The trustee has a duty to follow the terms of the trust and the law governing the administration of trusts.

2. Duty of loyalty (Prob C §16002)

The trustee has a duty to administer the trust exclusively for the benefit of trust beneficiaries.

3. Duty of impartiality (Prob C §16003)

The trustee has a duty to not favor the interests of one beneficiary over another, except if the trust provides otherwise.

4. Duty to avoid conflict of interest (Prob C §16004)

The trustee has a duty to avoid transactions that benefit the trustee personally.

5. Duty not to require beneficiary to relieve trustee of liability (Prob C §16004.5)

The trustee cannot require a beneficiary to waive their rights as a condition of distribution.

6. Duty to not undertake adverse trust (Prob C §16005)

The trustee may not act as trustee of any other trust that has a competing interest with this trust.

7. Duty to take control of and preserve trust property (Prob C §16006)

The trustee must gather trust assets and take reasonable steps to preserve them.

8. Duty to make trust property productive (Prob C §16007)

The trustee has a duty, subject to certain qualifications, to make the trust assets profitable.

9. Duty to keep trust property separate and identified (Prob C §16009)

The trustee has a duty to keep the assets and debts of the trust separate from the trustee own. In other words, the trustee should not commingle funds.

10. Duty to enforce claims (Prob C §16010)

The trustee must take reasonable actions to pursue assets that may be owed to the trust.

11. Duty to defend actions (Prob C §16011)

The trustee has the duty to take actions to prevent a loss to the trust, such as by defending a lawsuit.

12. Duty not to delegate (Prob C §16012)

Subject to certain exceptions, the trustee must perform actions on behalf of the trust rather than having others act on behalf of the trust.

13. Co-trustee Duties (Prob C §16013)

If the trustee serves along with a co-trustee, then each trustee has a duty to participate in the administration and prevent the other from committing a breach of the trust.

14. Duty to use special skills (Prob C §16014)

In managing the trust property, the trustee must use at least ordinary business ability. However, if the trustee has special skills, the trustee will be held to a higher standard of care.

15. Duty to provide information to beneficiaries (Prob C §§16060-16064)

The trustee has a number of duties related to providing financial and other information to beneficiaries.

16. Discretionary powers to be used reasonably (Prob C §§16080-16081)

Even if the trust provides that a particular action is entirely within the trustee's discretion, the trustee has a duty to act reasonably in exercising that discretion.
If the trustee then breaches of these aforementioned duties, they are subject to removal.