Trustee Misconduct in California: What Beneficiaries and Trustees Need to Know

Trustee misconduct in California is a trustee's failure to do what the Probate Code and the trust require: using trust property for personal benefit, dealing with the trust on terms adverse to beneficiaries, refusing to keep beneficiaries informed, or not accounting when an account is owed. A beneficiary can ask the Superior Court to compel the trustee, surcharge the trustee or remove the trustee.

Most people searching for this are not dealing with an abstract legal question. A parent has died, a sibling or a stepparent or a family friend is now the trustee, and the information has stopped coming: no copy of the trust, no statement of what is in the accounts, a house that seems to have been sold or rented without explanation, a distribution that was expected months ago. Some readers are on the other side of the table, serving as trustee and now accused of misconduct by relatives who want answers. Either way, the question is the same: whether what has happened is a breach of a legal duty, and what a California court can do about it.

This page explains the duties a California trustee owes, what counts as a breach, the remedies the Probate Code provides, how a trustee is removed, the deadlines that apply, and how a petition moves through the Superior Court.

What Trustee Misconduct Means Under California Law

A trustee owes the beneficiaries a fiduciary duty, meaning a legal obligation to act in the beneficiaries' interest rather than the trustee's own, with honesty and care, when handling property that belongs to the trust. On accepting the trust, the trustee must administer it according to the trust instrument and, except where the instrument provides otherwise, according to the Probate Code (Probate Code section 16000). Misconduct is conduct that falls short of those obligations.

One of the clearest rules concerns self-dealing and conflicts of interest. Under Probate Code section 16004(a), a 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, and not to take part in any transaction in which the trustee has an interest adverse to the beneficiary. A trustee who lives rent-free in a trust house, buys trust property for themselves, lends trust money to their own business, or pays personal bills from a trust account is the kind of conduct this duty can address, depending on the trust instrument and the circumstances. Allegations that a trustee mixed trust funds with personal funds are measured against a separate duty: under Probate Code section 16009, a trustee has a duty to keep the trust property separate from other property not subject to the trust and to see that the trust property is designated as property of the trust.

Section 16004(c) adds a presumption. A transaction between the trustee and a beneficiary, made during the existence of the trust or while the trustee's influence over the beneficiary remains, by which the trustee obtains an advantage from the beneficiary, is presumed to violate the trustee's fiduciary duties. This is a presumption affecting the burden of proof, which means the trustee, not the beneficiary, must show the transaction was fair. It does not apply to the provisions of an agreement between trustee and beneficiary about hiring the trustee or the trustee's compensation.

Information duties are the second common source of disputes. A trustee must keep the beneficiaries reasonably informed of the trust and its administration (section 16060), and, except as section 16069 provides, must report requested information relevant to a beneficiary's interest on reasonable request (section 16061). Generally, a trustee must also account at least annually, at the termination of the trust and upon a change of trustee, but that duty runs only to each beneficiary to whom income or principal is required or authorized in the trustee's discretion to be currently distributed, subject to exceptions in section 16062 and section 16064 (section 16062).

Charging more than the trust or the law allows is a third category. Taking an increased fee without the notice the Probate Code requires is addressed in the next section.

Not every disagreement with a trustee is misconduct. A trustee may make a reasonable discretionary decision a beneficiary dislikes, sell an asset a family member hoped to keep, or take time to gather assets after a death. Whether conduct crosses the line depends on the trust's terms, the facts and the duties described here.

California Law on Trustee Duties: What the Probate Code Requires

The duty to inform and the duty to report are related but different. Section 16060 is a standing obligation: the trustee must keep beneficiaries reasonably informed whether or not anyone asks. Section 16061 is triggered by a request: when a beneficiary makes a reasonable request, the trustee must provide the requested information about the trust's administration that is relevant to that beneficiary's interest, subject to the exceptions in section 16069. A beneficiary who has never asked for anything may still be owed general information; a beneficiary who has asked specific questions is owed answers to them.

The duty to account, under section 16062, is narrower in who it reaches. An account is a written report of what the trust held, what came in, what went out and what remains. The annual, termination and change-of-trustee accounts are owed to beneficiaries entitled or eligible to receive current distributions of income or principal, not to every person named somewhere in the trust. Section 16062 also excludes certain older trusts, including a living trust created by an instrument executed before July 1, 1987. Even where a trust instrument or a beneficiary's writing waives the account, a court may compel the trustee to account upon a showing that it is reasonably likely a material breach of the trust has occurred.

Compensation has its own rules. If the trust instrument does not specify the trustee's compensation, the trustee is entitled to reasonable compensation under the circumstances (section 15681). A trustee may not charge an increased trustee's fee for administering a particular trust without first giving at least 60 days' written notice to each beneficiary entitled to an account under section 16062, each beneficiary given the last preceding account, and each beneficiary who has made a written request for notice of an increased fee and given an address (section 15686(b)). "Trustee's fee" includes the base fee, percentage rate, minimum fee, hourly rate and transaction charges, but not fees for extraordinary services (section 15686(a)). If a beneficiary files a petition under section 17200 for review of the increase or for removal of the trustee, and serves it on the trustee before the 60 days run, the increase does not take effect until the court orders otherwise or the petition is dismissed (section 15686(c)).

The trustee's notification is a separate obligation. Under section 16061.7(a), a trustee must serve a notification in listed events, including when a revocable trust or a portion of it becomes irrevocable because of a settlor's death, and whenever the trustee of an irrevocable trust changes; the list includes other events as well. The notification goes to each beneficiary of the irrevocable trust or portion, subject to section 15804, and, where the triggering event is a settlor's death, to each heir of the deceased settlor. Service of this notification is what starts the trust contest deadline discussed below.

These duties do not end once the first account is delivered or the first question is answered. They continue for as long as the trustee serves.

Remedies Available When a Trustee Breaches a Duty

If a trustee commits a breach of trust, or threatens to commit one, a beneficiary or cotrustee may commence a proceeding under Probate Code section 16420(a) for any of the following purposes that is appropriate:

• to compel the trustee to perform the trustee's duties;
• to enjoin the trustee from committing a breach of trust;
• to compel the trustee to redress a breach of trust by payment of money or otherwise;
• to appoint a receiver or temporary trustee to take possession of the trust property and administer the trust;
• 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;
• subject to section 18100, to trace trust property that has been wrongfully disposed of and recover the property or its proceeds.

A constructive trust is a court order declaring that a specific piece of property is held for the trust's benefit and must be returned. An equitable lien is a court-imposed claim against property that secures the trust's right to be repaid. These remedies are not exclusive: section 16420(b) says they do not prevent resort to any other appropriate remedy provided by statute or the common law.

Many beneficiaries reasonably wonder whether a trustee can be made to pay out of their own pocket. The answer is the surcharge, a court order requiring the trustee personally to make the trust whole. Under section 16440(a), a trustee who commits a breach of trust is chargeable with whichever of these 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. A surcharge is not automatic. Under section 16440(b), if the trustee 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 it would be equitable to do so.

Probate Code section 859 reaches further where property was wrongfully taken. If a court finds that a person has in bad faith wrongfully taken, concealed or disposed of property belonging to a trust or a decedent's estate (among others), or has taken, concealed or disposed of it by undue influence in bad faith or through elder or dependent adult financial abuse as defined by statute, that person is liable for twice the value of the property recovered by an action under that part of the Probate Code. The court may also, in its discretion, award reasonable attorney's fees and costs against the person, except as otherwise required by law. None of this follows from an allegation; it depends on the court making the required finding. Section 859 applies to "a person," so it is not limited to trustees. These claims are often brought by petition under section 850, explained further in the page on California trust litigation.

The procedural vehicle for most of these remedies is Probate Code section 17200, under which a trustee or beneficiary may petition the court concerning the trust's internal affairs. Under section 17206, the court in its discretion may make any orders and take any other action necessary or proper to dispose of the matters presented, including appointing a temporary trustee to administer the trust in whole or in part.

Removing a Trustee in California

A trustee may be removed in three ways under Probate Code section 15642(a): 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. Some trusts give a named person or a majority of beneficiaries the power to replace a trustee; where the instrument is silent or the power does not apply, the path is a petition.

The grounds for removal by the court, under section 15642(b), include:

• the trustee has committed a breach of the trust;
• the trustee is insolvent or otherwise unfit to administer the trust;
• hostility or lack of cooperation among cotrustees impairs the administration of the trust;
• the trustee fails or declines to act;
• the trustee's compensation is excessive under the circumstances.

The list in the statute is partial. Section 15642(b) contains further grounds, including one concerning a sole trustee who is a person described in section 21380(a), and the word "include" means a court is not limited to the grounds listed.

For a family where the person in charge is a sibling who has stopped answering calls, removal can feel like the only answer. Often the first court step is narrower. Among the orders available under section 17200(b)(7), which also include compelling the trustee to provide a copy of the terms of the trust, 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 preceding the request. A beneficiary may petition to compel an account, subject to section 16064, if the trustee has failed to submit a requested account within 60 days after written request and no account has been made within the six months preceding the request. What an account or a set of records shows frequently determines whether removal is sought at all.

Filing a petition does not remove anyone. Removal is a decision the court makes after considering the evidence, and the trustee has the opportunity to respond. Where the trust property needs protection while the petition is pending, the court may appoint a temporary trustee under section 17206, or a receiver or temporary trustee under section 16420(a).

Statute of Limitations for Breach of Trust Claims

Probate Code section 16460(a) sets two branches for a breach of trust claim, unless the claim is already barred by adjudication, consent, limitation or otherwise.

First, if a beneficiary has received an interim or final account in writing, or another written report, that adequately discloses the existence of a claim against the trustee, the claim is barred as to that beneficiary unless a proceeding is commenced within three years after receipt of the account or report. An account or report adequately discloses a claim if it gives the beneficiary enough information to know of the claim or to have reasonably inquired into it.

Second, if no account or report adequately discloses the claim, or the beneficiary received no written account or report at all, the claim is barred unless a proceeding is commenced within three years after the beneficiary discovered, or reasonably should have discovered, the subject of the claim.

Receipt matters. For an adult reasonably capable of understanding the account, it counts as received when the adult receives it personally; for an adult who is not, it counts when the person's legal representative, such as a guardian ad litem, receives it (section 16460(b)). Accounts that arrive in the mail and go unread can still start the first branch.

A trust contest, a challenge to the validity of the trust or an amendment itself, has a different deadline. Under section 16061.8, a person served with the trustee's notification under section 16061.7(a)(1) may not bring an action to contest the trust more than 120 days from the date the notification is served, or 60 days from the date a copy of the terms of the trust is delivered to the person during that 120-day period, whichever is later. The first period is triggered by service of the notification; the second by delivery of the trust's terms within that window. Neither runs from the date of death. Grounds and procedure for a contest are covered in the page on how to contest a trust.

How California Trust Litigation Works: The Petition Process

Trust disputes in California are heard by the Superior Court of California for the county with jurisdiction over the trust, usually in its probate division. The case begins with a petition rather than a conventional lawsuit complaint.

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 whether the trust exists. Section 17200(b) lists proceedings that concern internal affairs, and the list is not exhaustive. It includes determining questions of construction of the trust instrument; determining the existence of any immunity, power, privilege, duty or right; determining the validity of a trust provision; ascertaining beneficiaries and who receives property on termination, to the extent the instrument does not decide it; settling the accounts and passing upon the trustee's acts, including discretionary powers; instructing the trustee; compelling the trustee to provide a copy of the trust's terms, provide information or account; and granting powers to the trustee. A trustee accused of misconduct can also use section 17200, for example by asking the court to settle an account or to instruct the trustee before acting. More detail is in the page on the Probate Code 17200 petition.

In an information or accounting dispute, the sequence usually runs like this:

1. Written request. The beneficiary asks the trustee in writing for the specific information or the account. A written request matters because section 17200(b)(7) measures the waiting period from it.
2. Sixty days. If the trustee does not provide the information or account within 60 days, and none was provided in the six months before the request, the conditions for a petition to compel are met.
3. Petition. The beneficiary files a petition in the Superior Court, stating what was requested, when, and what relief is sought. The petition may combine a request to compel with other relief, such as surcharge, removal or recovery of property, where the facts support it.
4. Hearing. The court hears the matter, and the trustee may respond. Under section 17206, the court may make any orders necessary or proper to dispose of the matters presented, including appointing a temporary trustee.

Contested matters can involve discovery of bank records and property documents, objections to an account once it is filed, and further hearings before the court decides.

What This Site Covers — and What It Does Not

This site is about disputes. Its pages address trustee misconduct and breach of fiduciary duty, petitions to compel information or an account, objections to accounts, surcharge claims, trustee removal, section 859 claims for property taken in bad faith, and trust contests governed by section 16061.8.

This site does not cover creating, funding, drafting or amending a trust or a will, and does not explain how to administer a trust or an estate when no one disputes anything. A trustee who is simply trying to learn the routine steps of administration, with no conflict, is outside what this page addresses. The site covers California law only, and disputes heard in the Superior Court of California.

Discussing a Trustee Misconduct Dispute

A dispute over a trustee's conduct usually turns on paper: the trust instrument and any amendments, the trustee's notification and the date it was served, the written requests a beneficiary sent and the dates they went out, any accounts or reports received, and the bank, property and transaction records behind them. Those documents decide which duty is at issue, whether the 60-day conditions of section 17200(b)(7) have been met, which branch of the three-year period in section 16460 applies, and what remedy a court could consider. An attorney who reviews them can say how the rules on this page apply to the facts; readers whose question is about setting up or routinely administering a trust, with no dispute, will find that topic outside this site.

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