Duties of Trustees

Chapter 1 of Part 4 of Division 9 of the Probate Code deals with the duties of trustees. Article 1 concerns the trustee’s duties in general.

Section 16000 provides that, upon acceptance of the trust, the trustee has a duty to administer the trust according to the trust instrument and, except to the extent the trust instrument provides otherwise, according to this division.

Section 16001 requires the trustee of a revocable trust to follow any written direction acceptable to the trustee given from time to time in specified instances.

Section 16002 specifies that the trustee has a duty to administer the trust solely in the interest of the beneficiaries. It is not a violation of the duty for a trustee who administers two trusts to sell, exchange, or participate in the sale or exchange of trust property between the trusts, if both specified requirements are met.

Section 16003 states that, if a trust has two or more beneficiaries, the trustee has a duty to deal impartially with them and must act impartially in investing and managing the trust property, taking into account any differing interests of the beneficiaries.

Section 16004 provides that the trustee has a duty not to use or deal with trust property for the trustee’s own profit or for any other purpose unconnected with the trust, nor to take part in any transaction in which the trustee has an interest adverse to the beneficiary.

The trustee may not enforce any claim against the trust property that the trustee purchased after or in contemplation of appointment as trustee, but the court may allow the trustee to be reimbursed from trust property the amount that the trustee paid in good faith for the claim.

Section 16004.5 states that a trustee may not require a beneficiary to relieve the trustee of liability as a condition for making a distribution or payment to, or for the benefit of, the beneficiary, if the distribution or payment is required by the trust instrument. This section may not be construed as affecting the trustee’s right to five specified rights.

Section 16005 explains that the trustee of one trust has a duty not to knowingly become a trustee of another trust adverse in its nature to the interest of the beneficiary of the first trust, and a duty to eliminate the conflict or resign as trustee when the conflict is discovered.

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.

Section 16007 provides that the trustee has a duty to make the trust property productive under the circumstances and in furtherance of the purposes of the trust.

Section 16009 imposes two specified duties on the trustee.

Section 16010 explains that the trustee has a duty to take reasonable steps to enforce claims that are part of the trust property.

Section 16011 says that the trustee has a duty to take reasonable steps to defend actions that may result in a loss to the trust.

Section 16012 imposed a duty on a trustee not to delegate to others the performance of acts that the trustee can reasonably be required personally to perform and may not transfer the office of trustee to another person nor delegate the entire administration of the trust to a cotrustee or other person.

Section 16013 specifies that, if a trust has more than one trustee, each trustee has a duty to do two specified actions.

Section 16014 confirms that the trustee has a duty to apply the full extent of the trustee’s skills. If the settlor, in selecting the trustee, has relied on the trustee’s representation of having special skills, the trustee is held to the standard of the skills represented.

Section 16015 sets forth the provision of services for compensation by a regulated financial institution or its affiliates in the ordinary course of business either to a trust of which it also acts as trustee or to a person dealing with the trust is not a violation of the duty. The term “affiliate” is defined.

Article 2 deals with the trustee’s standard of care. Section 16040 requires the trustee 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.

The settlor may expand or restrict the standard provided in subdivision (a) by express provisions in the trust instrument. A trustee is not liable to a beneficiary for the trustee’s good faith reliance on these express provisions. This section does not apply to investment and management functions governed by the Uniform Prudent Investor Act.

Section 16041 provides that a trustee’s standard of care and performance in administering the trust is not affected by whether or not the trustee receives any compensation.

Section 16042 states that all trust funds that come within the custody of the public guardian who is appointed as trustee of the trust may be deposited or invested in the same manner, and would be subject to the same terms and conditions, as a deposit or investment by the public administrator of funds in the estate of a decedent.