Trustees | The Duty to Enforce Claims
You are the beneficiary of your father’s trust. You’re also the successor trustee. Your father created the trust. This makes him the settlor.
He is also the trustee. He manages the trust. He names himself as the trust’s primary beneficiary of the trust during his lifetime.
You become the successor trustee at his death. You now have the duties of management and administration. You and your three siblings are beneficiaries of the trust. You are not trained for this.
Trust assets include rental properties, the family home, and stocks and bonds. You have the duty to marshal the assets. This means you are to organize and ultimately distribute assets to creditors and beneficiaries.
Contractual or legal claims are also assets of a trust. California law says that “the trustee has a duty to take reasonable steps to enforce claims that are part of the trust property.” And, the failure to pursue these claims may subject the trustee to responsibility for the loss. This is called surcharge.
Another way of saying this is if the trustee fails to enforce a trust’s $100,000 claim, he can become personally liable for the claim. We often see circumstances where this arises.
One sibling is a trustee who manages a trust formed to benefit all four siblings. One sibling is a non-rent paying occupant of one of the trust’s properties. The trustee is duty bound to collect rent. A trustee who fails to take steps to collect rent due from a tenant is normally subject to surcharge.
The trustee has a duty to treat all beneficiaries equally. Favoring one over another by failing to enforce a claim can make the trustee liable for the claim.
Hackard Law is a California law firm that focuses on estate, trust and catastrophic injury litigation. If you’d like to speak with us about your case, call us at 916 313-3030 or visit our hackardlaw.com website.
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