Being a Trustee for a Living Trust

A California trustee for a living trust is an individual or entity appointed to manage the assets and affairs held within a living trust that is established under California law. A living trust, generally structured as a revocable living trust, is a legal arrangement where assets are transferred into a trust during the settlor’s (the person who establishes the trust) lifetime, with instructions for how those assets should be managed and distributed both during the settlor’s lifetime and after their passing. As an experienced estate planning lawyer in Folsom, I have seen that living trusts have now become the predominant form of estate planning as compared to wills. 

Here are some key points to understand about a California trustee for a living trust:

1. Role and Responsibilities: The trustee has a fiduciary duty to manage the trust assets in the best interest of the beneficiaries and in accordance with the terms and instructions laid out in the trust document. The specific responsibilities of the trustee may include:
   • Managing and investing trust assets
   • Distributing income and/or principal to beneficiaries as specified in the trust document
   • Administering the trust in accordance with California law
   • Keeping accurate records of trust transactions and financial statements
   • Filing any required tax returns on behalf of the trust
2. Revocable Living Trust: In the case of a revocable living trust, the settlor typically serves as the initial trustee, maintaining full control over the trust assets and having the ability to make changes to the trust or revoke it entirely during their lifetime. For husband and wife living trusts, each spouse generally also serves as a trustee on their spouse’s trust.
3. Successor Trustee: It’s common to appoint a successor trustee in the trust document. This individual or entity steps in to manage the trust assets and carry out the trust’s instructions in the event of the settlor’s incapacity or passing. The successor trustee’s role becomes crucial when the settlor is no longer able to manage the trust.
4. Professional Trustees: Some individuals choose to appoint professional trustees, such as a trust company or a bank, as the initial or successor trustee. These professionals have expertise in trust administration and can provide continuity in management, especially in complex trusts or when the settlor prefers an impartial third party. Most clients generally select themselves, family or friends to be trustees, but occasionally professional trustees are warranted. 
5. Legal Requirements: Trustees in California are bound by state law and must adhere to the California Trust Code (California Probate Code, Division 9). This code outlines the legal responsibilities and standards for trustees, including matters related to accounting, reporting, and duties to beneficiaries.
6. Accounting and Reporting: Trustees are generally required to provide regular accountings and reports to beneficiaries, keeping them informed about trust activities and asset performance. Please note that in dealing with individual living trusts with the settlor as trustee, or with husband and wife living trusts with the husband and wife as trustees, this accounting is generally not required.
7. Compensation: Trustees, whether individuals or professionals, are entitled to reasonable compensation for their services unless the trust document specifies otherwise. 
8. Beneficiaries: Beneficiaries of a living trust are the individuals or entities designated to receive trust assets, either during the settlor’s lifetime or after their passing. The trustee has a duty to act in the best interest of the beneficiaries and to distribute trust assets as specified in the trust document.

Summary

Appointing a trustee for a California living trust is an important decision, as this individual or entity plays a central role in the management and distribution of trust assets. It’s crucial to carefully consider the choice of trustee, provide clear instructions in the trust document, and seek legal advice from a Folsom attorney who specializes in estate planning to ensure compliance with California trust laws.