Individuals who create a trust will frequently name family members or friends to act as the successor trustee of their trust. Family members or friends are typically not professional trustees, and thus have no prior experience acting as a trustee. If you have been named as a trustee of a trust, you should seek the advice of counsel to provide guidance regarding your fiduciary duties, obligations and responsibilities.
As discussed in our prior blog article entitled “Fiduciary Duties Owed by Trustees: Part I,” the trustee of a trust owes many fiduciary duties to the beneficiaries of the trust. In addition to the duties owed by a trustee discussed in Part I of this series, there are two important duties of a trustee: The Duty of Disclosure and the Duty Not to Delegate.
- The Duty of Disclosure and Duty to Report and Account
California Probate Code Section 16060 states that the “trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.” Accordingly, a trustee must furnish to each beneficiary all material information necessary to protect the beneficiary’s interests in the trust. The trustee’s disclosure must be full and complete. California Probate Code Section 16062 requires the trustee to furnish an accounting of the trust assets at least annually, at the termination of a trust and upon a change of trustee to each beneficiary to whom income or principal is required or authorized in the trustee’s discretion to be currently distributed. California Code Section 16064 lists exceptions to the trustee’s requirement to account to beneficiaries, which includes the case in which a beneficiary waives the right to receive an accounting.
- Duty Not to Delegate
The Duty Not to Delegate is rooted in California Probate Code Section 16012(a). While the general rule is that the trustee may not delegate the trustee’s duties, the trustee may delegate acts that a person would ordinarily delegate in the management of his or her own affairs, such as hiring accountants, attorneys, investment advisers and appraisers to advise and assist the trustee with the trustee’s administrative duties. In the event a trustee has delegated a matter to an agent, co-trustee, or other person or professional, the trustee has a duty to exercise general supervision over the individual performing the delegated matter.
A trustee must perform and adhere to a significant number of duties and responsibilities. When administering a trust, the trustee should be cognizant of the several specific deadlines and penalties for missing those deadlines. This blog article only covers two duties and does not discuss any of the deadlines. It is imperative that a trustee seek the advice of an expert. If you have been named as a trustee of a trust, and have questions about your responsibilities or the administration of that trust, please feel free to contact one of our Trusts & Estates lawyers.
Thank you for joining us on ClarkTalk! We look forward to seeing you again on this forum. Please note that the views expressed in the above blog do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interest relating to the subject matter covered by the blog. If you have any questions about fiduciary duties owed by trustees, please feel free to email Tiffany Halimi at firstname.lastname@example.org or to call her at 213.629.5700. For more information about Clark & Trevithick’s Trusts & Estates practice, please visit our website at www.ClarkTrev.com.