Serving as a trustee of an irrevocable trust is a serious responsibility. At the core of your duties is a legal obligation known as fiduciary duty. This guiding principle ensures trustees act with care, loyalty, and good judgment on behalf of the beneficiaries. At OC Trial Group, APC, we help trustees across California understand and carry out these obligations. Whether you’re new to trust administration or facing challenges in your role, this overview of general fiduciary principles can help you stay on the right path.
Fulfilling the Terms of the Trust
A trustee’s first responsibility is to follow the instructions outlined in the trust document. This legal instrument controls how the trust is administered, from how assets are managed to how and when distributions are made.
- Take time to read and understand the full terms of the trust.
- Seek clarification when any part of the document is unclear.
- Carry out the trust’s instructions precisely and in good faith.
Your duty is not just to act—it’s to act according to the trust’s terms.
Acting in the Beneficiaries’ Best Interests
Trustees must always act in the best interest of the beneficiaries. This principle includes:
- Treating all beneficiaries fairly and without favoritism.
- Avoiding decisions that could benefit one party at the expense of another.
- Setting aside personal feelings or relationships when making decisions.
This duty of loyalty means you cannot put your own interests—financial or personal—ahead of the trust’s purpose or the beneficiaries’ welfare.
Avoiding Conflicts of Interest
Conflicts of interest can undermine your ability to act impartially. As a trustee, you must avoid any situation where your personal interests—or outside obligations—might influence how you administer the trust.
This includes:
- Not profiting from trust transactions.
- Not engaging in deals where you have a personal stake.
- Disclosing potential conflicts before they become legal issues.
If you’re unsure whether a situation creates a conflict, consult with a trust attorney before proceeding.
Safeguarding and Managing Trust Assets
You are responsible for preserving trust property and making sure assets are protected and productive. This means:
- Keeping trust property separate from personal assets.
- Maintaining proper records and financial statements.
- Using insured accounts to minimize risk.
Trustees should also stay informed about real estate, investment accounts, and other assets to ensure they remain in good standing and in line with the trust’s objectives.
Prudent Delegation of Duties
Generally, trustees are expected to perform their duties personally. However, in some cases, delegation is permitted, especially when it comes to financial or investment decisions.
Any delegation must be:
- Prudent and reasonable.
- Made in good faith.
- In accordance with the trust’s best interests.
For example, hiring a professional investment advisor may be appropriate if managing a portfolio exceeds your knowledge or experience.
Exercising Reasonable Care and Skill
California law holds trustees to a “prudent person” standard. This means you must exercise reasonable care, skill, and caution in all aspects of trust management.
Ask yourself:
- Would a careful person with similar responsibilities make the same decision?
- Have I done my due diligence before acting?
If the answer is no, it may be time to reassess or seek legal guidance.
The Role of the Uniform Prudent Investor Act
Trustees in California are also governed by the Uniform Prudent Investor Act (UPIA). This law requires trustees to:
- Review and evaluate trust assets regularly.
- Diversify investments to reduce risk.
- Develop an investment strategy aligned with the trust’s goals.
Failing to comply with UPIA can expose trustees to liability. Staying proactive and informed is key to avoiding issues.
We Help Trustees Understand Their Legal Duties
Being a trustee is not always straightforward, especially for individuals who are new to trust administration. At OC Trial Group, APC, we work closely with trustees to ensure they understand their responsibilities and feel confident in their role.
We provide practical summaries of relevant trust laws, offer strategic guidance when complex decisions arise, and deliver legal support if disputes or liability concerns arise.
Protecting the Trust—and Yourself
Fiduciary duties form the foundation of trust administration. When trustees uphold these principles, they help protect both the trust’s purpose and its beneficiaries. If you’re serving as a trustee and need help understanding your obligations or resolving disputes, OC Trial Group, APC is here to help. Contact us today to protect your role and fulfill your duties with confidence.