What you are taking on when you say yes

Being named a trustee is a significant legal responsibility. Many people agree to serve as a successor trustee for a parent, sibling, or close friend without fully understanding what the role involves. When the time comes to actually administer the trust, they find themselves navigating a set of legal duties they did not anticipate.

California’s Uniform Trust Code (codified in the California Probate Code starting at section 15000) establishes specific standards for trustee conduct. Failing to meet those standards can expose a trustee to personal liability, including the obligation to restore any losses caused by a breach of duty out of their own funds.

This is not meant to discourage people from serving as trustees. It is meant to make sure they understand what they are agreeing to.

The duty of loyalty

The first and most fundamental duty is the duty of loyalty: the trustee must administer the trust solely in the interest of the beneficiaries. Not in the trustee’s own interest, not in the interest of some beneficiaries over others, and not in the interest of the grantor’s family in general.

Concrete examples of what this means:

  • The trustee cannot purchase trust assets for themselves at a favorable price, even if beneficiaries agree
  • The trustee cannot place trust funds in an account or investment that benefits the trustee
  • The trustee cannot self-deal, which includes transactions between the trust and any business the trustee owns or controls

California Probate Code 16002 codifies this duty. Violations are voidable by the court and can result in the trustee being required to return any profit they made at the trust’s expense.

The duty to administer prudently

The trustee must invest and manage trust assets with the care, skill, and caution of a prudent investor. California adopted the Uniform Prudent Investor Act, codified at Probate Code 16045-16054. This is a portfolio-level standard, not a security-by-security one.

What this means in practice:

  • The trustee must diversify investments unless circumstances suggest otherwise
  • The trustee must balance risk and return in light of the trust’s purposes
  • The trustee must consider investment costs, including fees charged by advisors
  • The trustee must review the investment portfolio periodically, not set it and forget it

A trustee who holds all trust assets in a single stock, or who lets assets sit in a low-yield checking account for years without investing them, may have breached this duty even if no actual loss occurred.

If a trustee lacks investment expertise, they can delegate investment management to a professional, but they must exercise reasonable care in selecting the advisor and must continue to monitor performance.

The duty to keep records and account

California Probate Code 16060-16064 requires trustees to keep clear and accurate records of all trust transactions and to account to the beneficiaries at least annually. The accounting must show:

  • Trust property at the beginning of the accounting period
  • All receipts, gains, and income during the period
  • All disbursements, losses, and distributions during the period
  • Trust property at the end of the accounting period
  • A schedule of any proposed fees charged by the trustee

Beneficiaries have the right to demand an accounting and to petition the court to compel one if the trustee does not provide it. A trustee who does not keep records cannot produce an accounting, which creates both a compliance problem and a practical problem when beneficiaries have questions.

The duty to inform and communicate

Beyond formal accountings, trustees have an ongoing duty to keep beneficiaries reasonably informed about the trust and its administration. This includes notifying beneficiaries when they become entitled to receive information (for example, when the trust becomes irrevocable at the grantor’s death) and responding to reasonable requests for information.

California Probate Code 16061.7 requires the trustee to send a specific notice to beneficiaries within 60 days of becoming aware that the trust is irrevocable. That notice starts a 120-day period during which beneficiaries can contest the trust. Missing this deadline is a common administrative error with significant consequences.

The duty to act impartially among beneficiaries

When a trust has both current beneficiaries (people receiving income or distributions now) and remainder beneficiaries (people who receive what is left after the current beneficiary dies), the trustee must balance their interests fairly. Investing entirely in high-growth assets that benefit the remainder at the expense of current income may favor one group over another. California Probate Code 16003 codifies this impartiality duty.

Specific tasks in administering a California trust after death

When the trust grantor dies and the successor trustee steps in, the administrative sequence typically includes:

Immediate steps:

  • Obtain death certificates (typically 10-15 copies for a larger estate)
  • Locate and secure all trust assets
  • Notify financial institutions of the death and your authority as successor trustee
  • Open a trust bank account to receive funds and pay expenses

Creditor and tax matters:

  • Notify known creditors and publish a creditor notice (California Probate Code 19000-19006 sets a 120-day claim period for trusts)
  • File the decedent’s final personal income tax return (due April 15 following death)
  • If the trust has taxable income, file a trust income tax return on Form 1041
  • Obtain a date-of-death appraisal for real property and other significant assets

Distribution:

  • Prepare and distribute the trust accounting to beneficiaries
  • Obtain signed receipts and releases from beneficiaries
  • Distribute assets according to the trust terms
  • Transfer real property by preparing and recording new deeds in San Diego County

Trust administration in California is legally complex enough that most successor trustees benefit from at least consulting an estate planning or trust administration attorney. This is not a sign of incompetence. It is a recognition that the legal framework has specific requirements that are easy to miss.

The most common points where trustees need guidance: the creditor notice process, federal and state tax filings, real property transfers, and distributing assets when beneficiaries disagree about timing or valuation.

For information on professional trust administration support in San Diego County, see the trust administration service page. For context on how a successor trustee is typically named in a living trust, see the living trusts page.

The California State Bar at calbar.ca.gov can connect you with a licensed attorney in San Diego County who handles trust administration.

Trust Law SD connects San Diego families with experienced local estate planning and trust administration attorneys. Call (858) 925-5546 to get matched with an attorney who can guide you through trustee duties or advise on administration of a trust you have inherited responsibility for.

Can a trustee charge a fee for their services?

Yes. California Probate Code 15681 allows a trustee to receive reasonable compensation for their services. What is “reasonable” depends on the size and complexity of the trust, the time spent, and the skill required. Many family member trustees choose not to charge a fee, particularly if they are also a beneficiary. Professional trustees typically charge 0.5-1.5% of trust assets annually.

What if the trustee makes a mistake?

A trustee who makes an honest administrative error and corrects it promptly, without personal benefit and without significant harm to the trust, is unlikely to face personal liability. A trustee who self-deals, ignores investment duties, fails to account to beneficiaries, or acts in bad faith can be held personally liable for resulting losses. Beneficiaries can petition the court to surcharge the trustee (require them to pay damages) or to remove them.

Can a trustee be removed?

Yes. A trustee can be removed by the court for cause, including breach of fiduciary duty, incapacity, refusal to act, or a determination that removal is in the best interest of the trust and its beneficiaries. Beneficiaries who collectively hold a majority interest in the trust can also petition for removal in some circumstances. A co-trustee can petition as well. The trust document itself may specify grounds for removal or a removal procedure.