Under the California Probate Code, a trustee’s duties include following the trust document, investing prudently, acting loyally and impartially toward beneficiaries, keeping trust property separate and productive, informing and accounting to beneficiaries on fixed timelines, and personally covering any losses caused by a breach. Those obligations are concentrated in Sections 16000 through 16081, with related rules on notice, accountings, creditors, compensation, and removal scattered elsewhere in the code. Below is what each duty actually requires and what it costs to get wrong.
Follow the Trust Document
Section 16000 requires the trustee to administer the trust according to its terms and, where the instrument is silent, to follow California trust law.1California Legislative Information. California Probate Code 16000 – Trustees Duties in General Personal disagreement with a provision is irrelevant. The settlor’s intent controls unless a court orders otherwise.
When the trust gives the trustee discretion over distributions, Section 16081 still requires acting in accordance with fiduciary principles, not in bad faith or in disregard of the trust’s purposes, even where the trust uses words like “absolute” or “sole” discretion.2California Legislative Information. California Probate Code 16081 Document the reasoning for every discretionary call. A short written note identifying what the beneficiary requested, what standard applied, and why the trustee decided as they did is the best defense against later challenges.
When trust language is genuinely ambiguous, the safer path is to petition the court for instructions rather than guess and face personal liability for guessing wrong.
Standard of Care
Section 16040 sets the general standard. A trustee must administer the trust with the care, skill, and caution that a prudent person in a similar role would use.3California Legislative Information. California Probate Code 16040 – Trustees Standard of Care This covers administrative work like selecting vendors, managing real property, and handling tax filings.
Professional trustees face a higher bar. Section 16014 says a trustee must apply the full extent of their skills, and if the settlor chose the trustee based on claimed expertise, the trustee is held to the standard of those represented skills.4California Legislative Information. California Probate Code 16014 A bank that markets itself as a sophisticated investment manager cannot later be judged by the standard of a well-meaning relative.
The Prudent Investor Rule
For investment and asset management, Section 16046 displaces the general standard with the Uniform Prudent Investor Act. The settlor can expand or restrict the rule in the trust document, and a trustee who relies in good faith on those express provisions is not liable for doing so.5California Legislative Information. California Probate Code 16046 – Duty to Comply with Prudent Investor Rule
Section 16047 fills in what prudent investing looks like. The trustee evaluates investments in the context of the overall portfolio, not in isolation, and weighs factors including economic conditions, inflation, tax consequences, liquidity needs, and each beneficiary’s other resources.6California Legislative Information. California Probate Code 16047 Reasonable diversification is required. A trustee who leaves the portfolio concentrated in a single stock or asset class takes significant legal risk, because courts measure whether the overall strategy had risk and return objectives reasonably suited to the trust’s purposes.
Loyalty and the Ban on Self-Dealing
Section 16002 requires the trustee to administer the trust solely in the interest of the beneficiaries.7California Legislative Information. California Probate Code 16002 – Trustees Duties in General There is no competing constituency to balance.
Section 16004 prohibits self-dealing. A trustee cannot use trust property for personal profit, participate in transactions where their interests conflict with the beneficiaries’, or buy claims against the trust.8California Legislative Information. California Probate Code 16004 – Trustees Duties in General When a trustee enters a transaction with a beneficiary and gains an advantage, the law presumes a fiduciary violation and places the burden on the trustee to prove otherwise. That presumption lasts as long as the trust exists or the trustee’s influence over the beneficiary continues.
Consequences are real. In Estate of Gump (1991) 1 Cal.App.4th 582, a bank trustee committed negligent and intentional breaches; the court disallowed roughly $91,570 in trustee fees and denied over $79,000 in attorney fee claims.9Justia. Estate of Gump Self-dealing can also lead to removal and a surcharge requiring the trustee to reimburse the trust.
Impartiality Among Beneficiaries
When a trust has more than one beneficiary, Section 16003 requires the trustee to deal impartially with all of them, accounting for their differing interests.10California Legislative Information. California Probate Code 16003 The classic conflict is between a current income beneficiary and remainder beneficiaries who inherit the principal later. Chasing high yield shortchanges the remaindermen; an all-growth strategy starves the current beneficiary.
Impartiality is not identical treatment. If the trust instrument directs unequal treatment, follow it. The duty bites where the trust is silent or grants discretion, and documenting the objective reasons behind each decision is the single best protection against a later complaint.
Take Control, Protect, and Segregate the Assets
A trustee must take control of trust property promptly. Section 16006 requires reasonable steps to take and keep control of trust property and to preserve it.11California Legislative Information. California Probate Code 16006 – Trustees Duties in General Section 16007 adds a duty to make trust property productive in furtherance of the trust’s purposes.12California Legislative Information. California Probate Code 16007 – Trustees Duties in General That means securing real estate, collecting rents and investment income, verifying title is in the trust’s name, and keeping property from sitting idle or deteriorating.
Section 16010 requires reasonable steps to enforce claims that belong to the trust.13California Legislative Information. California Probate Code 16010 – Trustees Duties in General If someone owes the trust money, pursue it. Ignoring valid claims is itself a breach.
Section 16009 imposes two related duties: keep trust property separate from non-trust property, and designate trust property as belonging to the trust.14California Legislative Information. California Probate Code 16009 Commingling funds or failing to re-title an asset is the kind of mistake that leads straight to liability.
Limits on Delegation
A trustee is expected to do the job personally where that is reasonable. Section 16012 prohibits transferring the office of trustee to another person or delegating the entire administration.15California Legislative Information. California Probate Code 16012 A trustee cannot hand everything to a financial advisor or attorney and walk away. Where delegating a particular task is appropriate, the trustee still has to supervise.
Section 16401 governs liability for an agent’s acts. A trustee is generally not responsible for an agent’s conduct, but liability attaches when the trustee directed the agent, delegated something that should not have been delegated, failed to use reasonable care in selecting or retaining the agent, or neglected to periodically review the agent’s performance.16California Legislative Information. California Probate Code 16401 Investment management has its own regime under Section 16052, which allows broader delegation to professional managers so long as the trustee uses care in selection and keeps monitoring.
Co-Trustee Responsibilities
Each co-trustee must participate in administration. Section 16013 also requires each co-trustee to take reasonable steps to prevent another co-trustee from committing a breach and to compel a fellow co-trustee to fix a breach already committed. A passive co-trustee who looks the other way shares the liability.
Keep Beneficiaries Informed
Section 16060 creates a general duty to keep beneficiaries reasonably informed about the trust and its administration.17California Legislative Information. California Probate Code 16060 – Trustees Duty to Report Information and Account to Beneficiaries A trustee should not administer in secrecy, even when the instrument says nothing about communication.
Section 16061.7 imposes a specific 60-day deadline. When a revocable trust becomes irrevocable, most commonly on the settlor’s death, the trustee must serve a formal notification on all beneficiaries and heirs within 60 days.18California Legislative Information. California Probate Code 16061.7 The same 60-day notice applies when there is a change of trustee on an irrevocable trust. If the trusteeship was vacant at the triggering event, the clock starts when the new trustee begins serving. The notification matters because it triggers the 120-day period for a beneficiary to contest the trust. Missing or delaying the notice extends the window for challenges and exposes the trustee to liability.
Accountings
Section 16062 requires a formal written accounting at least annually, when the trust terminates, and whenever the trustee changes, delivered to each beneficiary currently receiving distributions or eligible to receive them at the trustee’s discretion.19California Legislative Information. California Probate Code 16062
Section 16063 says what each accounting must contain: a statement of all receipts and disbursements of principal and income during the period; a snapshot of the trust’s assets and liabilities at the end of the period; and the amount of trustee compensation paid since the last accounting.20California Legislative Information. California Probate Code 16063 – Trustees Duty to Report Information and Account to Beneficiaries For trusts holding real estate or business interests, valuations and financial details must accurately reflect the trust’s position. In Conservatorship of Coffey (1986) 186 Cal.App.3d 1431, a conservator was surcharged $13,500 plus interest after failing to disclose a lapsed insurance policy in the final accounting, which the court treated as an omission of material fact.
A trust instrument can waive the accounting requirement, and a beneficiary can waive it in writing. Even so, Section 16064 allows a court to compel an accounting when there is reason to believe a material breach has occurred, and certain disqualified trustees defined by the Probate Code cannot benefit from a waiver at all.21California Legislative Information. California Probate Code 16064
Notice of Proposed Action
California gives trustees a procedural shield. Before taking a significant step, a trustee can serve a Notice of Proposed Action describing what they intend to do and why. Section 16502 requires the notice to include the trustee’s contact information, a description of the proposed action, an explanation of the reasons, and a deadline of at least 45 days for beneficiaries to object.22California Legislative Information. California Probate Code 16502
If no beneficiary files a written objection within the 45-day window, Section 16503 protects the trustee from liability for that action, both from the beneficiaries who received notice and from all current and future beneficiaries.23California Legislative Information. California Probate Code 16503 Objecting is low-friction; a beneficiary just returns the form and need not explain. If someone objects, the trustee can either abandon the action or petition the court for approval. The shield does not apply where the beneficiary receiving notice was a minor or an incapacitated adult without a guardian or conservator who received notice on their behalf.
Experienced trustees use the procedure for anything open to challenge: selling real estate, making large distributions, changing investment strategies, or borrowing against trust assets.
Creditor Claims After the Settlor’s Death
When a settlor dies, trust property that was subject to the settlor’s power of revocation becomes available to pay the settlor’s creditors, but only to the extent the probate estate is insufficient. Section 19001 sets the framework.24California Legislative Information. California Probate Code 19001 A trustee who distributes everything to beneficiaries without reserving enough for valid creditor claims can be personally on the hook.
Section 19003 lets the trustee file a proposed notice to creditors with the court when no probate has been opened.25California Legislative Information. California Probate Code 19003 Once published and served, creditors must file within the statutory window. Section 19004 bars late claims from collection against trust assets and prevents a creditor from maintaining an action without first filing properly.26California Legislative Information. California Probate Code 19004 The notice is optional, but skipping it means the trustee loses the ability to cut off late claims. Known creditors must be served within the later of four months after first publication or 30 days after the trustee first learns of them.
Trustee Compensation
If the trust instrument specifies compensation, those terms control. When the trust is silent, Section 15681 entitles the trustee to reasonable compensation under the circumstances.27California Legislative Information. California Probate Code 15681 California Rule of Court 7.776 identifies the factors courts weigh in deciding what is reasonable, including the trust’s gross income and value, the quality of administration, any special expertise the trustee brought, the scope of risk and responsibility, the time spent, and what settlors authorize, courts allow, and corporate trustees charge for similar trusts locally.28Judicial Branch of California. Rule 7.776 – Compensation of Trustees
Excessive compensation is itself a ground for removal under Section 15642. Paying yourself generously without documentation invites a petition from the beneficiaries.
Liability for Breach of Trust
Section 16440 sets the financial consequences. A breaching trustee can be charged with any loss or depreciation in trust value resulting from the breach, with interest; any profit the trustee personally made through the breach, with interest; and any profit the trust would have earned but for the breach.29California Legislative Information. California Probate Code 16440 If the trustee acted reasonably and in good faith, the court has discretion to excuse liability in whole or in part when equity warrants.
Section 16461 caps the protection a trust instrument can offer. An exculpatory clause cannot shield a trustee who committed an intentional breach, acted with gross negligence or bad faith, or showed reckless indifference to the beneficiaries’ interests, and it cannot shield profits derived from a breach.30California Legislative Information. California Probate Code 16461
Beneficiaries have three years to sue. Under Section 16460, if the trustee provided a written accounting or report that adequately disclosed the claim, the beneficiary must file within three years of receiving it. Without adequate disclosure, the three years start when the beneficiary discovered or should have discovered the breach.31California Legislative Information. California Probate Code 16460 A thorough accounting starts the clock. A vague one may leave the trustee exposed indefinitely.
Resignation and Removal
A trustee cannot simply walk away. Section 15640 limits resignation to specific methods: following a procedure in the trust instrument, obtaining consent from the person who holds the power to revoke (for revocable trusts), obtaining consent from all adult beneficiaries currently receiving or entitled to receive income or principal (for irrevocable trusts), or petitioning the court.32California Legislative Information. California Probate Code 15640 Resignation does not erase liability for conduct during the trustee’s tenure, and the trustee must help transition to a successor.
Section 15642 allows a settlor, co-trustee, or beneficiary to petition for removal, and the court can also act on its own motion.33California Legislative Information. California Probate Code 15642 – Resignation and Removal of Trustees Statutory grounds include breach of trust, unfitness or insolvency, hostility among co-trustees that impairs administration, failure or refusal to act, and excessive compensation. A removed trustee may also face surcharge liability for losses caused during their tenure, on top of whatever flows from the underlying breach.