Trustee Duties for a Revocable Trust After Death

By Jeff Franco J.D./M.A./M.B.A.

When a grantor creates a revocable trust, he must appoint a trustee to manage or administer the trust. Trustees have fiduciary duties, meaning they must always administer the trust in the best interest of the beneficiaries and pursuant to the terms of the trust document. Moreover, if the trust doesn’t terminate upon the death of the grantor, the trustee continues to be responsible for these duties pursuant to the terms of the trust document.

Duty of Loyalty

All trustees owe a duty of loyalty to trust beneficiaries whenever they engage in activities on behalf of the trust. The duty of loyalty prevents a trustee from engaging in transactions on behalf of the trust for personal gain. In the event the trustee profits from a transaction, such as using his discretionary purchasing power to sell personal property to the trust, the beneficiaries retain the right to void the transaction and hold the trustee responsible for all costs the trust incurs. However, a trustee doesn’t breach his duty of loyalty if the trust document authorizes such a transaction or the court approves it.

Control and Protection

If the grantor of the revocable trust requires that the trustee continue to administer the trust after her death, the trustee continues to have an unconditional obligation to protect and control trust assets. However, the duty to protect trust assets only requires that the trustee act reasonably. If the trust owns tangible personal property, such as valuable artwork, the trustee must retain possession of the artwork or closely monitor an agent to whom he delegates the responsibility. However, the trustee has no duty to protect the artwork if doing so presents risks of personal injury or other significant damage to the trustee.

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Duty of Confidentiality

Most states impose a duty of confidentiality on trustees. In California, for example, unless the trustee engages in a transaction on behalf of the trust that requires the disclosure of information, such as the names of the trust’s beneficiaries or its net worth, the trustee must keep this information confidential. However, in the event a trustee breaches this duty, beneficiaries must prove that they or the trust incur damages as a result of the breach to obtain a court award against the trustee.

Trust Accounting

All states impose a duty on the trustee to provide an accounting of trust assets to beneficiaries. In California, for example, the trustee must provide beneficiaries with financial statements that disclose all trust assets, liabilities, earnings, expenses and distributions. States can vary as to the frequency in which the trustee must provide an accounting to beneficiaries, but in California, the trustee must provide a financial report on an annual basis. However, when the beneficiaries request additional accountings and give the trustee reasonable notice, the trustee has an obligation to comply with the request.

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References

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The Responsibilities of a Trustee Under California Law

The primary purpose of a trust is to provide for the transfer of property to named beneficiaries without the court involvement required with a will. Due to the lack of court oversight, the possibility exists for the person in charge of the trust, called the “trustee,” to use the trust property for improper purposes. The California Probate Code requires the trustee to administer the trust according to its terms and to the provisions of state law, which impose specific responsibilities and duties designed to prevent trustee misconduct.

Roles of a Trustee

A trustee manages property for beneficiaries according to the terms of a trust. Generally, a trustee is appointed by a person, called a grantor or settlor, who establishes and funds the trust. The settlor transfers legal title of assets to the trustee so she may manage and distribute them for named beneficiaries. A trustee's role includes responsibly and honestly handling trust assets and ensuring the purpose of the trust is carried out.

Trustee Not Paying Beneficiary

A trustee is a party who administers the assets of a trust and distributes them to beneficiaries in compliance with terms established by the trust grantor. Although the terms of a trust often allow a trustee considerable discretion with respect to the distribution of assets to beneficiaries, beneficiaries have legal options if the trustee's refusal to distribute trust assets appears to be unjustified.

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