Trustee’s duty to the beneficiary

California law has long recognized that trusts describe a fiduciary “relationship” between the person holding legal title to property for the benefit of another and the beneficiary. See Estate of Shaw (1926) 198 C 352, 360. Every trustee has one mission—to protect the beneficiary. In this relationship, the benefits belong to the beneficiary and the burdens to the trustee. See Moeller v Superior Court (1997) 16 C4th 1124, 1134. On the duty to administer the trust according to its terms, see §§2.22.3. On the duty to account, see §§2.42.12. On the duty of confidentiality, see §§2.132.17.

The standard of care to which the trustee is held will determine whether the trustee has adequately carried out his or her duties. Failing to meet any duty owed to the beneficiary gives rise to a breach of trust and potential liability for the trustee. Prob C §16400. Some commentators have suggested that the appropriate standard of care is implied in each of the duties owed by the trustee to the beneficiary. The better analysis first establishes the appropriate standard of care arising out of the particular relationship between trustee and beneficiary, against which the discharge of trustee’s duties is to be measured. See §2.49.

The trustee must maintain a minimum standard of care in discharging his or her duties. The distinction between standard of care and duties is often ignored in analysis of breaches of trust. A trustee’s standard of care is not static but varies depending on the level of expertise the trustee brings to the office. Expert trustees are held to a higher standard than nonexpert trustees. See Prob C §16014 . Proper analysis starts with recognition of the relationship between trustee and beneficiary, subject to permissible, variant terms of the trust instrument. See Prob C §16040(b).

The discharge of a particular duty by a lay trustee lacking any particular expertise may meet the basic standard of care under Prob C §16040(a)  but may be inadequate if the trustee brings to office a particular expertise or the trust instrument requires enhanced performance. In the latter variant, the intent of the settlor is a primary factor in determining the applicable standard of care.

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