Often times a trustee may not be aware that he or she is violating their fiduciary duties. You may be asking yourself how that can be. Surely, everything a trustee needs to know in order to administer the trust has been written in black and white by the settlor. But the California Probate Code is filled with pages upon pages of rules that a trustee must comply with that they simply may not have any idea they are in breach of their fiduciary duty.
One common misconception is that a successor trustee can continue to handle the trust the same way the settlor had been before their passing. It is a big mistake to think this. For instance, if the settlor had been holding all of the trust assets in one type of asset class, like a stock in one company, that was completely within their right do so while alive. However, once they pass, the successor trustee must then sell a portion of those assets and diversify the investments according to the Ca. Probate Code. Failure to do so, would result in a breach of fiduciary duty. And if a beneficiary challenges this in court, the burden is on the trustee to prove they followed the rules set forth by the code.
Consult with a professional Estate Administration Attorney to make sure that you know the codes and do not accidentally breach your fiduciary duties.
*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.