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The trustee’s fiduciary duty, explained

On Behalf of | Apr 6, 2023 | Trust Litigation

As the trustee of a trust, you have an awesome responsibility. You must work according to the trust’s terms in the beneficiaries’ best interests. In other words, you owe a fiduciary duty under California law.

Am I a fiduciary?

A fiduciary is anybody who handles money and other assets that belong to someone else. This includes professionals like accountants, attorneys and real estate agents, but also trustees. As a fiduciary, it is your legal duty to act in the beneficiary’s best interests. If the beneficiaries can show 1) that a fiduciary relationship existed between you and them and detail the scope and duties of that relationship, and 2) that you breached any of those duties, they could have a claim against you in court.

What a breach of fiduciary duty can look like?

Breaches can range from intentional acts like embezzling from the trust to negligence like failing to pay taxes on the trust’s property as necessary or failing to keep the beneficiaries informed with regular updates, or answering their questions. The standard of proof in a civil lawsuit over an alleged breach of fiduciary duty is lower than in criminal court, which requires proof beyond a reasonable doubt. So any accusation must be taken seriously.

However, just because you have been accused, it does not mean you must quickly settle or resign as trustee. The beneficiary suing you or seeking your ouster must prove that the breach happened by a preponderance of the evidence. These cases can become highly technical and complicated. It is important that you work with an attorney who thoroughly understands trust litigation law and defending trustees.