What Are the Duties of a Trustee in California? A San Francisco Estate and Trust Administration Attorney Explains

Serving as a trustee in California carries real legal weight. Trustees who accept this role without fully understanding their obligations can face serious consequences, including personal liability. Whether you were recently named a successor trustee or are helping a loved one navigate this process, understanding California's Probate Code is the right starting point. An estate and trust administration attorney can help you navigate each step with confidence.

What Does a Trustee Actually Do Under California Law?

A trustee manages and distributes a trust's assets according to its terms and state law. When the person who created the trust passes away, the successor trustee steps in. That transfer of responsibility triggers legal duties spelled out in California Probate Code Sections 16000 through 16081. Courts hold trustees personally accountable when they fall short.

The Duty of Loyalty

Under Probate Code Section 16002, a trustee must administer the trust exclusively in the interest of the beneficiaries. The trustee cannot use trust assets for personal benefit, enter into self-dealing transactions, or make decisions that favor their own interests over those the trust is meant to serve.

The Duty of Impartiality

Probate Code Section 16003 requires that the trustee act impartially when investing and managing trust property, taking into account any differing interests among beneficiaries. Favoring one beneficiary over another can be a breach of fiduciary duty.

The Prudent Investor Rule

Under Probate Code Section 16047, California trustees must invest and manage trust assets the way a prudent investor would, considering factors like economic conditions, tax consequences, and each beneficiary's needs. The rule also requires reasonable diversification. A trustee who concentrates all assets in a single investment without sound reasoning may be held liable for resulting harm.

What Are the Notification and Accounting Requirements for California Trustees?

California law sets specific deadlines and procedures that trustees must follow. Missing them can expose a trustee to legal challenges.

The 60-Day Notification Requirement

When a revocable trust becomes irrevocable, most commonly because the settlor has died, the trustee must send formal written notice to all beneficiaries and heirs within 60 days under Probate Code Section 16061.7. Once beneficiaries receive that notice, they generally have 120 days to contest the trust's validity. In San Francisco and throughout the Bay Area, where trust assets often include high-value real estate and investment portfolios, a missed notice can trigger costly disputes.

The Ongoing Duty to Keep Beneficiaries Informed

Probate Code Section 16060 requires trustees to keep beneficiaries reasonably informed about the trust and its administration. Trustees cannot administer a trust in secrecy, even if the trust document itself does not spell out specific communication requirements.

Annual Accounting Obligations

Trustees must provide formal accountings to beneficiaries at least once a year, upon a change of trustee, and when the trust terminates. Under Probate Code Section 16063, these accountings must include a statement of all receipts and disbursements, a summary of assets and liabilities, a record of distributions made to beneficiaries, and a statement of the trustee's compensation. Beneficiaries can petition the court if the trustee refuses to comply.

What Happens When a Trustee Breaches Their Duties?

Trustees who violate their obligations can face removal, personal liability for losses to the trust, and orders to pay beneficiaries' attorney's fees. In San Francisco's probate courts, disputes over trustee conduct are not uncommon in larger estates involving multiple properties or blended family situations.

Good intentions are not a defense. A trustee who acts sincerely but fails to follow the California Probate Code may still face personal liability for resulting harm.

When Should a Trustee Hire an Attorney?

Trustees are not expected to be legal experts, but they are expected to fulfill their duties properly. An estate and trust administration attorney in San Francisco, CA, can help with drafting required notices, preparing annual accountings, navigating tax filings, managing real property, and resolving beneficiary disputes before they escalate. For complex Bay Area estates involving investment accounts, rental properties, or business interests, professional legal guidance is often essential.

Can a Trustee Be Removed in California?

Yes. Under Probate Code Section 17200, beneficiaries can petition the probate court to compel the trustee to provide information, review the trustee's actions, or remove the trustee entirely for breach of trust. Courts can also surcharge the trustee for damages caused by mismanagement.

Do Trustees Get Paid in California?

Trustees are generally entitled to reasonable compensation under California law. Courts will scrutinize trustee fees that appear excessive relative to the services provided. Document all work performed and consult an attorney before determining compensation.

Get Trusted Guidance From a San Francisco Trust Attorney

Understanding California's trustee duties is the first step. Getting the administration right is what protects you and the people depending on you. Catherine Yee, Attorney At Law, has served San Francisco families in estate planning and trust administration matters since 1991.

To learn more, visit the trust administration legal representation page. When you are ready to discuss your situation, reach out to schedule a consultation or call 415-982-7312. You can also find Catherine Yee, Attorney At Law on Google to read client reviews and get directions to the San Francisco, CA, office.