Trustee Favoring One Beneficiary: What California Law Requires and What Beneficiaries Can Do

If a trustee seems to be favoring one beneficiary, California law says that trustee must deal impartially with all of them, taking their differing interests into account. A trustee may treat beneficiaries differently only where the trust document allows it, and even then the trustee must use that discretion reasonably. A beneficiary who believes the line has been crossed may ask the Superior Court to step in.

Most people facing this question have noticed something that feels wrong. A sibling who is also the trustee keeps writing checks to themselves. A brother has lived in the family house for years and pays no rent. One beneficiary gets statements and answers while another gets silence. The reader is trying to work out whether the pattern is lawful discretion, a misunderstanding, or a breach of trust they can do something about. Some readers are trustees, trying to understand what the law expects of them now that a family member is asking hard questions.

This article explains the duty of impartiality, how a trustee's discretion can turn into favoritism, what information every beneficiary can request, when conduct becomes a breach, and what a California court may order. It is written for disputes, not for planning or routine administration.

What the Duty of Impartiality Requires Under California Law

Probate Code section 16003 states the rule directly: "If a trust has two or more beneficiaries, the trustee has a duty to deal impartially with them and shall act impartially in investing and managing the trust property, taking into account any differing interests of the beneficiaries."

The duty of impartiality is a fiduciary duty. A fiduciary duty is a legal obligation to act in the interests of someone else rather than in one's own interest. A trustee holds and manages property for other people, so the law holds the trustee to that higher standard.

The duty runs to every beneficiary, including those whose turn comes later. A current beneficiary, often called an income beneficiary, is someone entitled to receive income or principal now. A remainder beneficiary is someone who receives what is left when the current interest ends, such as children who inherit after a surviving spouse dies. Their interests often pull in opposite directions. The current beneficiary may want higher income now, and the remainder beneficiary may want the principal kept intact. Section 16003 asks the trustee to weigh those differing interests rather than quietly serving one side.

Impartiality does not always mean equal treatment. A trust may give one beneficiary more, or give the trustee authority to provide for one person's needs first. What the duty forbids is arbitrary favoritism, meaning unequal treatment the trust terms do not authorize and the trustee cannot explain.

Impartiality also works alongside the duty of loyalty. Probate Code section 16002(a) says, "The trustee has a duty to administer the trust solely in the interest of the beneficiaries." Together, these rules require a trustee to act for the beneficiaries as a group, fairly and without personal agenda.

How a Trustee's Discretion Can Become Favoritism

Discretion is a grant of judgment, not a blank check. Many California trusts let the trustee decide whether and when to distribute income or principal, and to whom. Probate Code section 16080 generally limits that power: "a discretionary power conferred upon a trustee is not left to the trustee's arbitrary discretion, but shall be exercised reasonably."

Broad wording in the document does not remove every limit. Under Probate Code section 16081(a), even when a trust gives the trustee "absolute," "sole," or "uncontrolled" discretion, the trustee "shall act in accordance with fiduciary principles and shall not act in bad faith or in disregard of the purposes of the trust." Section 16081 adds a further rule for a beneficiary who also serves as trustee. A trustee-beneficiary with power to make discretionary distributions to themselves under a standard must exercise that power reasonably and according to the standard. Unless the trust clearly says otherwise by express reference to that subdivision, such a trustee may make those distributions to themselves only for health, education, support or maintenance.

Some patterns may point to favoritism rather than lawful discretion:

• Consistently granting one beneficiary's distribution requests while denying comparable requests from others, with no documented reason.
• Sharing information with one beneficiary while withholding it from another.
• Managing investments in a way that steadily benefits one class of beneficiaries at the expense of another.

Favoritism sometimes overlaps with self-dealing, meaning a trustee acting for personal gain. Probate Code section 16004(a) says the trustee has a duty not to use or deal with trust property "for the trustee's own profit or for any other purpose unconnected with the trust, nor to take part in any transaction in which the trustee has an interest adverse to the beneficiary."

Section 16004(c) adds a presumption. A transaction between the trustee and a beneficiary, made while the trust exists or while the trustee's influence remains, by which the trustee obtains an advantage from the beneficiary, is presumed to violate the trustee's fiduciary duties. This presumption affects the burden of proof, so the trustee must show the transaction was proper. The presumption does not apply to the parts of an agreement about the trustee's hiring or compensation.

The Trustee's Duty to Keep All Beneficiaries Informed

Probate Code section 16060 sets the baseline: "The trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration." The duty speaks of beneficiaries, plural. It is not owed only to the beneficiary the trustee gets along with.

A beneficiary can also ask for specifics. Under Probate Code section 16061, except as section 16069 provides, "on reasonable request by a beneficiary, the trustee shall report to the beneficiary by providing requested information to the beneficiary relating to the administration of the trust relevant to the beneficiary's interest."

The formal account works differently. An account is a written report showing what came into the trust, what went out, and what remains. Under Probate Code section 16062(a), the trustee generally must account at least annually, at the termination of the trust and upon a change of trustee, to each beneficiary to whom income or principal is required or authorized in the trustee's discretion to be currently distributed. Not every beneficiary is owed an annual account, and sections 16062 and 16064 contain exceptions. Section 16064 recognizes waivers in the trust document or in a beneficiary's own writing. Even then, the court may compel the trustee to account upon a showing that it is reasonably likely a material breach of the trust has occurred.

For a beneficiary who feels shut out, this section often matters most. Selective disclosure, meaning sharing trust records with one beneficiary while stonewalling another, can itself breach both the duty to inform and the duty of impartiality.

The Probate Code also gives the request a timeline. Under section 17200(b)(7), a beneficiary may petition to compel the trustee to provide information under section 16061 if the trustee has failed to provide it within 60 days after the beneficiary's reasonable written request, and the beneficiary has not received the requested information within the six months before the request.

When a Trustee's Conduct Rises to a Breach of Trust

A breach of trust is a trustee's violation of a duty owed to a beneficiary. In favoritism disputes, the duties at issue are usually impartiality under section 16003, loyalty under section 16002, the self-dealing limits of section 16004 and the duty to inform under section 16060.

A finding of breach exposes the trustee to personal liability, called a surcharge. Probate Code section 16440(a) says the trustee is chargeable with whichever of the following is appropriate under the circumstances: any loss or depreciation in value of the trust estate resulting from the breach, with interest; any profit the trustee made through the breach, with interest; or any profit that would have accrued to the trust estate if the loss of profit resulted from the breach.

Surcharge is not automatic. Under section 16440(b), if the trustee "has acted reasonably and in good faith under the circumstances as known to the trustee," the court in its discretion may excuse the trustee in whole or in part, if doing so would be equitable. A trustee who made an honest, reasonable judgment call stands differently from one who knowingly steered value to a favorite.

A stronger remedy exists for the most serious conduct. Under Probate Code section 859, if a court finds that a person has in bad faith wrongfully taken, concealed or disposed of property belonging to a trust, or has done so by the use of undue influence in bad faith or through elder or dependent adult financial abuse, that person is liable for twice the value of the property recovered by an action under that part. The person may also, in the court's discretion, be liable for reasonable attorney's fees and costs. Neither result follows unless the court makes one of those findings, and the fees remain discretionary.

Timing matters too. Under Probate Code section 16460(a), a breach-of-trust claim is barred unless a proceeding is commenced within three years after the beneficiary receives an interim or final account, or other written report, that adequately discloses the existence of the claim. Where no account or report adequately discloses the claim, or the beneficiary receives none, the three years run from when the beneficiary discovered, or reasonably should have discovered, the subject of the claim. An account adequately discloses a claim if it gives enough information that the beneficiary knows of the claim or reasonably should have inquired.

What Beneficiaries Can Ask a California Court to Do

The usual vehicle is a petition, a formal written request asking the probate court for specific orders. Under Probate Code section 17200(a), except as section 15800 provides, a trustee or beneficiary may petition the court concerning the internal affairs of the trust or to determine its existence. The Probate Code 17200 petition covers matters including instructing the trustee, settling accounts, passing on the trustee's acts and exercises of discretionary power, and compelling the trustee to provide a copy of the trust terms. That list is not exhaustive.

When a breach has happened or is threatened, Probate Code section 16420(a) lets a beneficiary or cotrustee bring a proceeding for any appropriate purpose on this list:

• To compel the trustee to perform the trustee's duties.
• To enjoin, or stop, the trustee from committing a breach.
• To compel the trustee to redress a breach by payment of money or otherwise.
• To appoint a receiver or temporary trustee to take possession of and administer the trust property.
• To remove the trustee.
• Subject to section 18100, to set aside acts of the trustee.
• To reduce or deny the trustee's compensation.
• Subject to section 18100, to impose an equitable lien or a constructive trust on trust property. A constructive trust is a court order treating property as held for its rightful owner.
• Subject to section 18100, to trace wrongfully disposed trust property and recover it or its proceeds.

Section 16420(b) says these remedies do not prevent resort to any other appropriate remedy provided by statute or the common law. Under Probate Code section 17206, the court may make any orders and take any other action necessary or proper to dispose of the matters in the petition, including appointing a temporary trustee.

Removal follows its own statute. Under Probate Code section 15642(a), a trustee may be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a settlor, cotrustee or beneficiary under section 17200. The grounds in section 15642(b) include, among others, a breach of trust, insolvency or unfitness to administer the trust, hostility or lack of cooperation among cotrustees that impairs administration, failing or declining to act, and excessive compensation. That list is partial.

A petition to compel an account is also available under section 17200(b)(7), subject to section 16064, if the trustee has failed to submit a requested account within 60 days after the beneficiary's written request and no account has been made within the six months before the request.

The Role of the Trust Instrument: When Different Treatment Is Authorized

The trust document is the first thing any analysis turns to. A settlor, the person who created the trust, may direct that one beneficiary's needs come first. A common example is a trust that tells the trustee to provide for a surviving spouse's health and support, even if that reduces what the children eventually receive. A trustee following an instruction like that is carrying out the trust, not playing favorites.

Express discretion still has limits. Section 16080 requires that it be exercised reasonably, and section 16081 forbids bad faith or disregard of the trust's purposes even under "absolute" language. When a trustee relies on the document to justify unequal treatment, the court can look at the provision the trustee points to and whether the decision fit it. A petition under section 17200 may ask the court to construe the trust or pass on the trustee's exercise of discretionary powers.

Where the document is silent, the statutory default duties apply, including impartiality under section 16003.

This is also why a beneficiary who has never seen the full trust is guessing. California law requires a trustee to serve a notification on beneficiaries after certain events, including when a revocable trust becomes irrevocable because of a settlor's death, and section 16061 allows requests for information relevant to the beneficiary's interest. Section 17200(b)(7) separately allows a petition to compel the trustee to provide a copy of the trust terms. If the dispute is about whether a late amendment favoring one beneficiary is valid at all, that becomes a trust contest, with its own deadlines.

Common Patterns That Lead to Disputes Over Trustee Favoritism in California

Certain fact patterns come up again and again in these disputes. Each may or may not be a breach. The answer depends on the trust's terms and the specific facts.

The trustee who is also a beneficiary. A co-beneficiary serving as trustee makes distributions to themselves that are out of proportion to what others receive. Section 16081's limits on self-distributions often come into play here.

Investment choices that tilt the scales. A trustee may grow principal for remainder beneficiaries while keeping income low for the current beneficiary, or do the reverse. Section 16003 speaks directly to investing and managing with differing interests in mind.

Uneven information. One beneficiary receives accountings and quick answers while another's written requests go unanswered.

Free use of trust real estate. One beneficiary lives in a trust-owned house without paying fair rent, which can reduce the income or value available to everyone else.

Loans on special terms. The trust lends money to one beneficiary on terms no one else is offered.

For a beneficiary who recognizes their own family in one of these patterns, the next questions are usually what the trust says and what records exist. Those two things tend to shape everything that follows.

How California Courts Oversee Trustees: The Probate Court's Authority

Trust cases in California are heard by the Superior Court of California for the relevant county, sitting in its probate role. The court's authority over a trust's internal affairs comes from section 17200, and its power to fashion orders comes from section 17206. The California Courts' self-help resources describe how the state court system is organized.

A beneficiary does not have to wait for the trust to end or for a final account. Section 16420(a) applies when a trustee "commits a breach of trust, or threatens to commit a breach of trust," so a petition may be filed while the conduct is happening. While the dispute is pending, the court may appoint a receiver or temporary trustee under section 16420(a) or a temporary trustee under section 17206 to protect trust property.

Serving as both trustee and beneficiary does not by itself disqualify anyone. The dual role does bring the statutory limits on self-distributions in section 16081 into play, and a court reviewing the trustee's decisions can examine whether each one followed those limits.

The California State Bar runs a lawyer referral service for people looking for counsel in trust litigation matters. An overview of how California trust litigation proceeds is also available on this site.

If You'd Like to Talk Through a Favoritism Dispute

Whether unequal treatment is authorized discretion or a breach depends on the exact words of the trust and on the record of what the trustee did. An attorney looking at a dispute like this would typically want to see the trust and any amendments, accountings and statements received, written requests and responses with their dates, and evidence of distributions, loans or property use. Those dates also bear on which branch of the three-year period in section 16460 applies. This page is not written for readers setting up a trust or handling an administration where nobody disagrees.

To discuss a dispute like this with an attorney, request a consultation about your dispute through California Trust Litigation Lawyers.