A trust is a legal body formed as a part of estate planning to retain and protect assets for the benefit of specified beneficiaries. The settlor, or creator, of a trust, chooses a trustee to monitor and supervise the trust assets and investments, pay taxes and trust debts, and issue payments (called distributions) to beneficiaries. Trusts are normally established during the creator’s lifetime, but rarely after death.
What is a Trustee?
A Trustee is a person or company in charge of safeguarding and managing the assets under a trust. The trustee of a revocable living trust is often the person who established the trust, but in cases of illness or diminishing capacity, may be another person. Trust instruments name a replacement trustee or group of successor trustees. When a trustee becomes incompetent or dies, the next trustee normally takes responsibility for the trust. Assets commonly held in a trust include bank accounts, real estate, non-retirement brokerage accounts, stocks, LLC interests, business interests, and personal property. Trusts can also possess other assets as well, like automobiles, non-qualified annuities or even debt.
Responsibilities of a Trustee in California
Specific obligations imposed on trustees by California law include:
- Trustees must follow the terms of the trust document.
- They are responsible for appropriately enforcing trust claims and defending against legal acts that might financially hurt the trust.
- They may only utilize trust assets for trust purposes, never for personal gain.
- It is the responsibility of the trustee to manage the trust exclusively in the interest of the beneficiaries.
- If there are many beneficiaries, the trustee must treat them fairly and take into account any special requirements or interests that each of them may have.
- They may not make a legitimate beneficiary trust payment contingent on the beneficiary absolving the trustee of obligation.
- They may not indulge in a transaction that is damaging to a trust beneficiary’s personal interests.
- They may not become the trustee of another trust whose interests are opposite to the beneficiaries of the previous trust.
- They must not blend trust assets with other assets and must properly mark trust assets.
- They must behave in a reasonable manner in order to safeguard trust assets.
- They are responsible for making the trust property productive.
Trustees have a legal duty and responsibility to fulfill towards the trust beneficiaries. The trustee should treat beneficiaries equally and follow trust rules that benefit beneficiaries. Beneficiaries have a lawful right to access to information regarding the terms of the trust, as well as its debts, holdings, expenses and earnings.
How to Become a Trustee in California
The procedure for becoming a trustee in California differs depending on the circumstances. The settlors choose the first trustees. Direct relatives, close friends and other respected persons are often appointed as trustees. If a trustee passes away, becomes incapacitated, or refuses to act, the next named trustees (called successor trustees) can take over the role. The trust may have other methods to select new trustees. In rare circumstances, a court petition must be filed to name a new trustee.
How an Attorney Can Help with Matters Related to Trust?
California trustees should obtain legal advice and guidance from a San Jose trust attorney to understand their legal responsibilities and seek help in assistance with trust management. Keyes Law Group represents trustees, trust beneficiaries and those establishing trusts. A California estate planning attorney in the bay area becomes even more important to deal with the estate planning family owned business situations because the attorney would play the key role in understanding and handling the matters efficiently. If in a family trust one spouse dies, then the legal situation becomes more complex and professional legal help is recommended. A San Jose CA trust attorney with experience in matters related to trust can help navigate you through the process.
Schedule a consultation appointment with our trust attorney near San Jose CA at Keyes Law Group if you have a concern with a trustee failing to execute their obligations. We can lessen your stress, lower your exposure to personal culpability, and help you through the procedure in a systematic manner.