What Trustees Should Never Do

 

Serving as a trustee is often far more complicated than people expect. Many trustees believe they can simply “do what they think is fair,” but California trustees owe strict fiduciary duties to the beneficiaries of the trust. Even well intentioned mistakes can create personal liability, family conflict, and expensive litigation.

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At California Estate Planning Services, we regularly see trustees unintentionally create problems that could have been avoided with proper guidance early in the administration process.

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Common Trustee Mistakes

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Failing to Communicate With Beneficiaries

One of the fastest ways to create distrust is silence.

 

Beneficiaries often become frustrated when:

• calls are ignored

• emails go unanswered

• timelines are unclear

• financial information is withheld

• the trustee refuses to explain decisions

 

Even if the trustee is acting properly, lack of communication often causes beneficiaries to assume the worst.

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Mixing Trust Funds With Personal Funds

Trustees should never treat trust accounts as personal accounts.

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Examples of dangerous conduct include:

• depositing trust money into personal accounts

• paying personal expenses from trust funds

• failing to maintain separate records

• using trust property for personal benefit without authority

 

Even accidental commingling can create serious accounting and liability issues.

 

Delaying Administration Unnecessarily

Some trustees become so afraid of making mistakes that nothing gets done.

Meanwhile:

• bills remain unpaid

• homes deteriorate

• taxes go unfiled

• beneficiaries become angry

• investment opportunities are missed

 

Reasonable administration should move forward in a timely manner.

 

Making Unequal Distributions Without Authority

Trustees sometimes try to “fix family fairness” by making side deals or unequal distributions.

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That is extremely dangerous.

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A trustee’s job is generally to follow the trust document, not rewrite the estate plan based on personal opinions about which sibling deserves more.

Ignoring Proposition 19 Issues California property tax planning has become far more complicated under Proposition 19.

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Trustees who distribute real property without understanding:

• reassessment rules

• sibling buyouts

• primary residence requirements

• timing issues may unintentionally trigger major property tax increases for beneficiaries.

 

Refusing to Obtain Professional Help

Trustees do not need to know everything themselves.

In many cases, trustees should work with:

• attorneys

• CPAs

• financial advisors

• appraisers

• real estate professionals

 

Trying to “save money” by handling complex legal or tax matters alone sometimes creates much larger financial problems later.

 

Trustees Can Be Personally Liable

Many people do not realize trustees can sometimes be sued personally.

Potential claims may involve:

• breach of fiduciary duty

• failure to account

• self dealing

• negligence

• improper distributions

• failure to follow trust terms

 

Trust administration should be handled carefully and strategically from the beginning.

 

Proper Guidance Often Prevents Litigation

Many trust disputes begin with preventable mistakes during administration.

Early legal guidance often helps:

• reduce conflict

• clarify trustee duties

• improve communication

• avoid procedural mistakes

• reduce litigation risk

• protect both the trustee and beneficiaries

 

California Trust Administration Guidance

At California Estate Planning Services, we help trustees and beneficiaries throughout Orange County navigate trust administration, fiduciary duties, property tax issues, beneficiary disputes, and trust litigation matters.

 

If you are serving as trustee and have questions about your responsibilities, contact our office to discuss your specific situation.