As discussed in our prior blog articles entitled “Fiduciary Duties Owed by Trustees: Part I” and “Fiduciary Duties Owed by Trustees: Part II,” the trustee of a trust owes numerous fiduciary duties to the beneficiaries of the trust. In addition to the duties owed by a trustee discussed in Parts I and II of this series, there are two additional important duties of a trustee: Duty to Preserve Trust Property and the Duty to Make Trust Property Productive.
- Duty to Preserve Trust Property: California Probate Code Section 16006 states that “the trustee has a duty to take reasonable steps under the circumstances to take and keep control of and to preserve the trust property.” The duty to preserve trust property obligates the trustee of a trust to ensure that the trust’s assets are not being wasted, which includes keeping trust property in good repair. For example, if the trust owns a single family residence that is vacant, the trustee has a duty to make sure that the house is secure in order to protect it from vandalism, theft or similar types of damage. If the residence has a leaky pipe that causes damage to the property or a high utility bill, the trustee has the obligation to cause the leaking pipe to be repaired.
- Duty to Make Trust Property Productive: California Probate Code Section 16007 states that “the trustee has a duty to make the trust property productive under the circumstances and in furtherance of the purposes of the trust.” To continue with the example above, if the trust owns a single family residence that is vacant, the trustee has a duty to cause the single family residence to be made productive, which means the trustee should cause the vacant residence to generate income if the trust has income beneficiaries. A trustee can cause a residence to generate income by leasing the residence to a tenant who makes periodic rental payments or by selling the residence so that the proceeds can be invested in another way that generates income, such as income-producing securities.
A trustee must adhere to numerous 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 from a macro perspective and does not delve into the minutia of the duties discussed herein. 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 to beneficiaries, 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.