Richard S. Van Dyke, Esq.
Trustee’s Duties Specified In Probate Code
A violation by the trustee of any duty that the trustee owes the beneficiary is a breach of trust [Prob Code § 16400]. Therefore, when breach of trust is asserted as a ground for removal of a trustee, it should be stated with reference to one or more of the trustee’s duties as specified in the Probate Code. The Probate Code codifies the duties a trustee owes to the beneficiary as follows:
Duty to administer the trust [Prob Code § 16000];
Duty of loyalty [Prob Code § 16002];
Duty to deal impartially with beneficiaries [Prob Code § 16003];
Duty to avoid conflicts of interest [Prob Code § 16004];
Duty to not to require the beneficiary to relieve the trustee of liability as a condition for distribution [Prob Code § 16004.5];
Duty to not to undertake an adverse trust [Prob Code § 16005];
Duty to take control of and preserve trust property [Prob Code § 16006];
Duty to make the trust property productive [Prob Code § 16007;
Duty to keep trust property separate and identified as trust property [Prob Code § 16009];
Duty to enforce claims [Prob Code § 16010];
Duty to defend actions [Prob Code § 16011];
Duty to not delegate administration of the trust [Prob Code § 16012];
Duty to work dutifully with co-trustees [Prob Code § 16013]; (liability issues with co-trustees)].
Duty to use special skills [Prob Code § 16014]; (general duties of trustee)].
Duty to provide information to beneficiaries [Prob Code § 16060 et seq];
Duty to report and account [Prob Code § 16062];
Duty to exercise discretionary powers reasonably [Prob Code § 16080];
Trustee Must Exercise All Duties With Reasonable Skill and Care.
The reasonableness of a trustee’s exercise of his or her duties is measured against the statutory standard of care. The trustee is required to administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument [Prob Code § 16040(a)].
A breach of trust may be negligent, willful, and/or fraudulent, depending on the circumstance, and the presence of reliance and injury [Estate of Gump (1991) 1 CA 4th 582, 2 CR2d 269]. Ordinarily, a trustee must be personally at fault to be liable for breach of trust [Restatement (Second) of Trusts § 201, Comment a (1959)]. This fault requirement is satisfied when the trustee commits a breach of trust (1) in bad faith, (2) knowingly but in good faith, or (3) negligently [Restatement of Trusts, § 201].
Terms of Trust May Override Statutory Duties.
The terms of the trust may override the statutory duties of a trustee, except for certain aspects of the trustee’s duty to keep the beneficiaries informed and the trustee’s fundamental obligation to act in good faith, in accordance with the purposes of the trust, and for the benefit of the beneficiaries [Prob Code §§ 16000, 16461]. A trustee is not liable to the beneficiary for the trustee’s good faith reliance on a restriction or expansion by the settlor of the trustee’s duty or standard of care [Prob Code § 16040(b)].
Beneficiary May Ratify Trustee’s Unauthorized Conduct.
A beneficiary with capacity may consent, release, or affirm a trustee’s otherwise unauthorized conduct [Prob Code §§ 16463 (consent), 16464 (release), 16465 (affirmation)]. Under such circumstances, a trustee’s action in violation of his or her normal statutory duties would not constitute a breach of trust forming grounds for renewal.
In addition, a trustee who misappropriates trust property may be criminally liable for embezzlement [see Pen Code § 506].