Trustee’s Duty to Inform Beneficiaries in California

For beneficiaries, trust accounting is a crucial defense against underhanded or negligent trustees. This legal tool is an extension of one of the most important trustee duties in California for beneficiaries to understand: The duty to keep beneficiaries reasonably informed. If a trustee fails to fulfill this duty, working with a lawyer is essential to preserve your inheritance and the integrity of the trust. 

At Gokal Law Group, we have successfully defended beneficiaries against trustees who do not keep beneficiaries informed to their detriment for years. Learn more about this duty and how to rectify it in our blog.

Trustee’s Duty to Inform Beneficiaries in California

One of the most important California trust beneficiary rights is the right to remain reasonably informed about a trust and how the trustee is administering it.

This is also a fiduciary duty trustees must uphold. Beneficiaries have a right to demand information from the trustee, which can include things like bank and financial statements, real estate agreements, and more.

An important component of this duty is providing a trust accounting, which is an essential form of transparency so beneficiaries know how the trustee is administering the trust. However, only current income or principal beneficiaries are entitled to an accounting.

This is one of the most important trustee duties in California for beneficiaries to understand because this overview of the trust’s finances is how they know if they should take legal action to defend their rights and pursue California trust litigation.

Trustees are not allowed to withhold financial information for their protection against objections or litigation. The accounting must be comprehensive and detailed so that all beneficiaries understand the status of all trust assets, and it should include:

  • An inventory of trust assets on the date of the decedent’s passing
  • A detailed explanation of all income received
  • A detailed explanation of all expenditures
  • A statement of liabilities
  • A statement of the trustee’s compensation
  • A description of any agents hired
  • A statement that the recipient may petition the court to review the accounting within three years of receiving the accounting

A trustee must prepare an accounting at least annually. These documents are where beneficiaries can identify the first signs of a transgression. If numbers aren’t adding up, for example, this is a severe cause for concern.

Beneficiaries are also entitled to request and receive information about “what property came into [the trustee’s] hands, what has passed out, and what remains,” including:

  • All receipts and disbursements in cash
  • The sources that money came from
  • Who they paid
  • The purpose of payments

If an accounting is not comprehensive, this is a severe red flag, and working with a trust litigation lawyer is critical to protect your inheritance. A trustee’s failure to provide an accounting to a beneficiary can constitute a breach of duty and result in:

  • Holding the trustee personally liable for related damages
  • Removing the trustee
  • Reducing or eliminating trustee fees

“In many cases, the trust accounting is where we determine if a trustee is committing an egregious crime. Sometimes, failure to account can result from negligence, and simply compelling them to prepare one is satisfactory. Even so, we have seen instances where this negligence had far-reaching consequences. In one situation, this negligence extended far beyond their failure to account, and the trustee thought they could use the trust funds however they wanted to. Because they never prepared an accounting, the beneficiaries had no idea. It wasn’t until after we compelled them to prepare one that they realized this. In countless other situations, this is how we identify instances of theft and self-dealing, for example.”Harry Wallace, a partner and senior trust litigation attorney in Orange County with over 30 years of litigation experience in probate courts. 

Premier California Trust Litigation Lawyers

If a trustee fails to maintain transparency and keep beneficiaries reasonably informed, this is a severe breach of their trustee duties in California. This duty is a crucial protection for beneficiaries to ensure a trustee is doing their job and, in more reprehensible cases, not stealing from or jeopardizing their inheritance. If a trustee breaches this duty, acting immediately is imperative to protect your inheritance and the integrity of the trust.

Visit our Contact Us page and fill out a form to schedule a case evaluation to ensure the trustee always maintains transparency for your protection. Trust us to guard your trust.

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