Definition of Trustee
A trustee is the Trust manager, the person who calls the shots. But the trustee has limits on what they can do with the Trust property. The trustee cannot do whatever they want. They must follow the trust document, and follow the California Probate Code. More than that, trustees don’t get the benefits of the Trust. The Trust assets will pass to the Trust beneficiaries eventually. The Trust document specifies when that occurs. The trustee, however, will not ever receive any of the Trust assets unless the trustee is also a beneficiary.
Can the Trustee Benefit from the Trust?
Trustees are entitled to compensation for the work they do, but that’s the extent of a trustee’s financial rewards from acting as trustee.
Trustees also undertake all the work of managing the Trust assets. Some assets are easy to manage, such as cash in a bank account, or a small stock portfolio. Other assets are not so easy, such as commercial real estate. Rents must be collected, space must be advertised and leased, maintenance and upkeep must be arranged, it all takes time and effort to properly manage.
Trustees also have the job of keeping the books and records of the Trust, managing the financial affairs of the Trust, and reporting that information to the Trust beneficiaries in the form of a Trust accounting. Trust management is a lot of work.
Duties and Obligations of the Trustee
If you ever find yourself being asked to work as a trustee, the first thing you should do is study your duties and obligations. There are many duties with which you must comply. If you fail to meet your trustee duties, you can be sued and held personally liable for that mistake. You do have the right, as trustee, to hire a lawyer to advise you and to pay for that legal advice from the Trust funds. Once you obtain competent legal advice on what actions to take as trustee, then you really should follow that advice. Sounds obvious, but far too many trustee fail to follow it.
Aside from entitlement to “reasonable compensation”, being a trustee is a largely thankless job. You get all the work, have all the legal duties and obligations, and get none of the Trust benefits. Welcome to being a California Trustee.
