Determining A Trustee’s Liability

If you’re a beneficiary of a trust in California, it’s crucial to understand the responsibilities and potential liabilities of the trustee managing your assets. This blog explains the concept of trustee liability, detailing what happens when a trustee breaches their fiduciary duty under California Probate Code Section 16440.

Here’s what you’ll learn:

• Trustee liability applies when a trustee mismanages the trust or violates the terms of the trust.
• Trustees are responsible for acting in the interests of the beneficiary, with reasonable care and loyalty.
• A trustee may be personally liable for losses to the estate, missed profits, or personal gains from improper actions.
• Some liabilities of a trustee can be waived if they acted in good faith and within the trust document’s guidelines.
• Legal remedies are available through trust administration support if you suspect a breach.

Understanding these risks helps protect your rights and your inheritance.

Serving as a beneficiary of a trust in Woodland Hills or elsewhere in California can feel overwhelming—especially when your financial security depends on another person’s decisions. While you may trust that the settlor of the trust chose a responsible trustee, the idea of the trustee working with absolute impunity may seem unsettling to you.

Several in your position have come to the Law Offices of Alice A. Salvo with the same concerns, wanting to know what the liabilities of a trustee are and what happens if they fail to fulfill their responsibilities.

Trustee Duties and Liabilities Under California Law

The trustee of your trust is expected to take all reasonable care in managing the trust and executing the purpose of the trust as set forth by the settlor in the trust instrument. Trustees have a fiduciary duty to act in the interests of the beneficiary, not for personal gain.

If they fail in these duties, they may be subject to trustee personal liability.

Liabilities of a Trustee: What You Should Know

The details of that liability is in Section 16440 of the California Probate Code. It states that in the event of a breach of trust, a trustee is liable to you (as a beneficiary) for:

• Any loss or depreciation of value of the trust estate, including applicable interest, due to breach of fiduciary duty
• Any profit the trust estate would have earned without his or her breach of duty
• Any profits he or she made individually from his or her actions

These liabilities of trustee conduct are taken seriously by California courts, especially if the breach resulted in significant harm to the trust or its beneficiaries.

Can a Trustee Be Absolved of Liability?

If a trustee can demonstrate they acted in good faith and reasonably believed their actions complied with the trust’s terms, they may be excused from personal liability. However, that determination is made on a case-by-case basis.

Need Help with Trust Administration?

Whether you are a trustee needing guidance or a beneficiary concerned about a potential breach of fiduciary duty, our team is here to help. We provide legal support for all aspects of trust administration, including cases involving trustee duties and liabilities.

Contact the Law Offices of Alice A. Salvo to protect your interests and ensure your loved one’s legacy is honored properly.