Today we will be talking about a trustee’s fiduciary duty. Many people don’t realize what the duty entails and if you’re unsure by the end of this article, be sure to go to a fiduciary investment advisor to find out more. So, when you create a living trust, you appoint a successor trustee to be in charge and manage the trust in the event you are unable to do so either because of incapacity or death. Your trustee is bound to administer the trust by a fiduciary duty. Generally, this means that the trustee must act in each trust beneficiary’s best interest. Often trusts will have language that states that the creators of the trust (sometimes called the trustors or settlors) are primary beneficiaries during their lifetimes. This means, that while the creators of the trust are living, their successor trustees must do what is in their best interest before any other beneficiaries listed.
A fiduciary duty is meant to protect the beneficiaries of a trust.
Not only will the trust itself have more specific definitions of what this duty entails, but California law also is quite clear about these duties, which include:
- Duty of Loyalty-A trustee has a duty to administer the trust solely in the interest of beneficiaries.
- Duty to Account and Report Information to Beneficiaries-Typically a trustee must prepare an annual report to beneficiaries that explains all of the financial transactions that occurred in the trust for that year.
- Duty to administer the trust with care, skill and caution as a prudent person would under similar circumstances.
If you are a beneficiary and you feel that your trustee is failing to administer the trust in your best interest, then you are empowered to take action to demand that the trustee perform or even to remove the trustee. Typically, you need to rely on an attorney who has expertise in trust and estate litigation to assist. Sometimes these matters can be resolved outside of court, but often they must be addressed through a probate court proceeding-you will need a good attorney to assist you in navigating through this process.
When you create a living trust, one of the biggest decisions you make is choosing a successor trustee that will do what is in the best interest of you and your family. Please call (408) 217-2977 to schedule your complimentary consultation if you would like to discuss successor trustee and planning options.
All materials have been prepared for general information purposes only to permit you to learn more about our firm, our services, and the experience of our attorneys. The information presented is not legal advice, is not to be acted on as such, and may be subject to change without notice.