What Does a Trustee Do? Responsibilities Explained

Being named a trustee sounds like an honor until you realize it’s actually a job. A demanding one. Under California law, a trustee holds the highest standard of responsibility the legal system recognizes, called fiduciary duty, and the person accepting the role takes on real legal exposure, real deadlines, and real personal liability if something goes wrong.

Most of the people we work with accepted the trustee role out of love for a parent, a sibling, or a friend. They said yes before fully understanding what it meant.

If that’s you, or if you’re deciding whom to name as trustee in your own plan, here’s a clear-eyed look at what a trustee actually does in California and why choosing (or being) the right one matters.

What Is a Trustee?

A trustee is the person or institution legally appointed to manage assets held in a trust for the benefit of the beneficiaries.

The trustee holds legal title to the trust property, but they do not own it for personal use. Every decision, every transaction, every distribution has to be made for the beneficiaries, not for the trustee.

California trust law sets out trustee duties primarily in Probate Code Sections 16000 through 16015, with the reporting and accounting duties in Sections 16060 through 16064. Together, these rules define what a trustee must do and, just as importantly, what a trustee must not do.

The Core Duties Every California Trustee Owes

Under the California Probate Code, a trustee is bound by several specific duties:

• Duty to administer the trust according to its terms (§ 16000). The trust document is the rulebook. Follow it, don’t substitute personal judgment for the settlor’s.
• Duty of loyalty (§ 16002). Act solely in the interest of the beneficiaries. No self-dealing, no conflicts of interest.
• Duty of impartiality (§ 16003). Treat multiple beneficiaries fairly. Fair doesn’t always mean identical, but it does mean without favoritism.
• Duty to avoid conflicts of interest (§ 16004). No using trust property for personal profit or engaging in transactions where interests clash.
• Duty to take control of and preserve trust property (§ 16006). Gather the assets, secure them, protect them from loss.
• Duty to keep trust property separate from personal property (§ 16009). No commingling. This is one of the most common and most serious trustee mistakes.
• Duty to manage trust property productively (§§ 16007, 16047). Reasonable investments, no speculation, reasonable returns.
• Duty not to delegate (§ 16012). The trustee generally performs the role themselves, though they can hire professionals for specialized work.
• Duty to enforce claims and defend against claims (§§ 16010, 16011). Collect what’s owed and protect the trust from improper claims.

Each of these duties is enforceable. A trustee who breaches them can be held personally liable, surcharged (ordered to pay back losses from their own funds), removed from the role, and denied compensation.

The 60-Day Notification: The Most Important First Deadline

When a revocable trust becomes irrevocable (most commonly at the settlor’s death), the successor trustee triggers a mandatory notification requirement. Under California Probate Code Section 16061.7, the trustee must serve written notice on all beneficiaries and legal heirs within 60 days.

The notice must include information about the settlor, the trustee’s contact information, where the trust is being administered, and a specific warning that recipients have 120 days from the date of notification (or 60 days from receiving a copy of the trust, whichever is later) to contest the trust.

Under Section 16061.9, a trustee who fails to serve this notification is personally liable for all damages, attorney’s fees, and costs caused by the failure. And critically, without proper notice, the 120-day contest window never closes. A trust that should have been settled a year ago can be reopened indefinitely if the notice wasn’t served properly.

The Ongoing Duty to Keep Beneficiaries Informed

Separate from the initial notification, a trustee has an ongoing duty under Probate Code Section 16060 to keep beneficiaries reasonably informed about the trust and its administration. Section 16061 adds that, on reasonable request, the trustee must provide information relevant to a beneficiary’s interest.

In practice, this means sharing bank statements, property appraisals, distribution calculations, and major decisions with beneficiaries who ask. A trustee who stonewalls beneficiaries is courting litigation.

The Annual Accounting Requirement

Under Section 16062, a trustee must provide a formal accounting at least annually, at the termination of the trust, and upon a change of trustee.

The accounting goes to each beneficiary currently entitled to receive distributions. Section 16063 spells out exactly what the accounting must contain:

• A statement of receipts and disbursements of principal and income for the period
• A statement of the assets and liabilities at the end of the period
• The trustee’s compensation for the period
• The agents hired (attorneys, accountants, others), their relationship to the trustee, and their compensation
• A notice to the beneficiary that they can petition the court under § 17200 to review the account
• A statement that claims against the trustee must be brought within three years of receiving the account

Waivers of the accounting requirement in the trust document are valid in some circumstances but void in others, particularly when the trustee is a “disqualified person” under § 21350.5. If a beneficiary has reason to believe a material breach has occurred, the court can compel an accounting even if the trust waived it.

The Practical Workflow of Trust Administration

Beyond the statutory duties, here’s what a successor trustee typically does in the first year after a settlor’s death:

• First 30 days: Locate the trust document, obtain certified death certificates, secure trust property, notify banks and financial institutions, and lodge the original will with the court under Probate Code § 8200.
• Within 60 days: Serve the § 16061.7 notification on beneficiaries and heirs. Record an Affidavit of Death of Trustee with the county recorder if real property is involved.
• First few months: Inventory and appraise trust assets. Open a trust bank account with a new tax ID (EIN). Pay legitimate debts, taxes, and final expenses.
• Ongoing: Manage investments, communicate with beneficiaries, and prepare tax returns (the settlor’s final personal return and the trust’s Form 1041 returns).
• Before distribution: Wait out the creditor period, resolve any contests, prepare a final accounting, and obtain beneficiary or court approval before distributing.
• At termination: Distribute remaining assets according to the trust’s instructions, obtain receipts, and formally close the trust.

For most California trusts, trust administration takes 4 to 18 months. Simple trusts with cooperative beneficiaries and no real estate can close faster. Complex trusts with real property, blended families, or disputes can take longer.

Who Makes a Good Trustee?

A good trustee is organized, honest, patient, and willing to be transparent. They don’t have to be a financial expert, but they need to know when to hire one.

A few qualities worth looking for:

• Comfortable with spreadsheets, records, and deadlines
• Willing to communicate with beneficiaries even when the news is unwelcome
• Trusted by the family, not aligned with only one faction
• Geographically close enough to handle in-person tasks (visiting the property, meeting with professionals)
• Young enough and healthy enough to likely outlive the settlor by a meaningful margin

When no obvious family choice exists, a professional trustee (a bank trust department, a licensed professional fiduciary, or a trust company) can be the right answer. They charge a fee, but also bring experience, insurance, and distance from family politics.

When Being a Trustee Goes Wrong

The most common trustee breaches: commingling trust funds with personal accounts, missing the 60-day notification deadline, refusing to communicate with beneficiaries, delaying distributions unreasonably, self-dealing on trust property sales, and failing to keep adequate records. Each can result in personal liability, surcharge, and removal.

If you’ve been named a trustee and you’re unsure how to meet these obligations, or if you’re building your own estate plan and thinking about whom to name, contact us to book a planning session. We help trustees do the job right and help families choose the right person.

References

1. California Probate Code §§ 16000–16015 (general trustee duties).
2. California Probate Code § 16060 (duty to keep beneficiaries reasonably informed).
3. California Probate Code § 16061 (information on beneficiary request).
4. California Probate Code § 16061.7 (notification requirement; 60-day deadline).
5. California Probate Code § 16061.9 (trustee liability for failure to notify).
6. California Probate Code § 16062 (duty to account).
7. California Probate Code § 16063 (contents of accounting).
8. California Probate Code § 16064 (exceptions to accounting duty).
9. California Probate Code § 17200 (court review of trustee conduct).
10. California Probate Code § 8200 (lodging of will).