Litigation
Trustee Breach of Fiduciary Duty
A California trustee who self-deals, fails to account, plays favorites, or invests imprudently can be removed and personally surcharged for the loss.
A California trustee must administer the trust solely in the beneficiaries’ interest, deal impartially, invest prudently, follow the instrument, and keep beneficiaries informed. A breach of those duties — self-dealing, delay, favoritism, a missing accounting — can be remedied by removal, an injunction, tracing, and surcharge under Probate Code §16420.
Breach of fiduciary duty
- Core statutes
- Probate Code §§16000–16015 (duties); §16420 (remedies)
- Loyalty
- §16002 — administer solely in the interest of the beneficiaries
- Accounting
- §§16060–16062 — inform and account
- Personal exposure
- Surcharge is a judgment against the trustee, not only the trust
Every California trustee is a fiduciary. That is not a compliment. It is a set of statutory duties, most of them in Probate Code §§16000–16015, that can be enforced in the probate court. Beneficiaries do not have to prove malice. They have to prove a duty, a breach, and (for surcharge) a loss. This article is the map we walk through in a first consult on a suspected breach.
The duties that get litigated
- Loyalty (§16002). The trustee must administer the trust solely in the interest of the beneficiaries. Self-dealing — buying trust property, borrowing from the trust, occupying the house without a written, fair arrangement — is the classic breach.
- Impartiality (§16003). A trustee with income and remainder beneficiaries, or with children from two marriages, cannot simply pick a favorite. Impartiality does not mean equal; it means the instrument, not the trustee’s affection, controls.
- Prudent investor (§16040, Uniform Prudent Investor Act). Leaving a concentrated stock position, sitting on vacant real property, or chasing a private deal because a brother-in-law recommended it is how otherwise honest trustees get surcharged.
- Inform and account (§§16060–16062). Beneficiaries are entitled to information reasonably necessary to enforce their rights, and to an accounting. Silence is itself a breach. See when a trustee will not provide an accounting.
- Follow the instrument (§16000). A trustee who rewrites the distribution scheme because it feels fairer than the document is not being kind. They are breaching.
What a surcharge case looks like
Surcharge is a money judgment against the trustee personally for losses caused by the breach. The court compares what the trust is with what it would have been under a compliant administration. Lost rent, a sale below fair value to a related party, and unauthorized compensation are typical line items. Tracing is available when trust property can still be followed into another asset.
Fee petitions cut both ways. A trustee who has to be dragged into compliance often loses compensation for the period of the breach (§16420(a)(7)). A beneficiary who files a makeweight petition can be the one paying fees. The pleadings should match the records.
Defenses trustees actually use
Consent, release, and ratification by a beneficiary who had full information. An exculpatory clause in the trust (narrowly construed, and never a shield for bad faith or reckless indifference). The argument that a loss was market-driven rather than a breach. Laches, if a beneficiary sat on known facts. None of those defenses is a reason to skip the consult; they are a reason to get the timeline right before filing.
Tresp Law, APC represents beneficiaries pressing these claims and trustees who need to get compliant before a petition is filed. If you are on either side, call (858) 248-2779 or request a consultation. Related reading: how to remove a trustee and our trust and probate litigation overview.
This article is general information about California law, not legal advice, and reading it does not create an attorney–client relationship. Trust and probate deadlines are strict and many rights are lost by missing one — for guidance on your own situation, contact Tresp Law, APC or call (858) 248-2779.
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Common questions
Frequently asked
What duties does a California trustee owe?
To administer the trust according to its terms (Probate Code §16000), to act with loyalty (§16002), to deal impartially among beneficiaries (§16003), to use reasonable care under the prudent-investor rule (§16040), and to keep beneficiaries reasonably informed and to account (§§16060–16062).
Can a trustee also be a beneficiary?
Yes, and it is common. Dual roles do not excuse self-dealing. A trustee-beneficiary who occupies the family home rent-free, hires their own company, or delays a sale to preserve a personal lifestyle is in the teeth of the duty of loyalty.
What can the court do about a breach?
Probate Code §16420: compel performance, enjoin a threatened breach, compel redress of a completed breach, trace and recover property, and reduce or deny compensation. Removal under §15642 is a separate, often companion, remedy.
Is a trustee personally liable?
For a breach, yes — surcharge is a personal judgment. Trustees sometimes have errors-and-omissions coverage, and they sometimes do not. The trust estate is not a shield for a fiduciary who took the money.
This page is general legal information, not legal advice, and does not create an attorney-client relationship. California trust and probate law is fact-specific and deadlines are unforgiving — please speak with a qualified attorney about your own circumstances.
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