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Determining A Trustee’s Liability

12/29/2022 | Trustees

Being party to a trust in Woodland Hills, CA or another California city can be a nerve-wracking proposition given that your interest in it are wholly impacted by the actions of another. While you of course want to trust that the settlor of the trust chose a trustee that he or she believed and had faith in, 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 standard of accountability a trustee is held to and what is the liability if he or she fails the duties.

The trustee of your trust is expected to take all reasonable care in executing the purpose of the trust as set forth by the settlor in the trust instrument. The trustee is liable to you and other beneficiaries if he or she does not meet that fiduciary duty. 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 occurring as a result of his or her actions (including interest)
  • 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

Keep in mind, however, that if it is shown that the trustee was acting in good faith, he or she may be absolved of liability. More information detailing trustee’s liability can be found here on our site.