Trustee Function

• In a living trust, a living individual, known as the "settlor," legally transfers his property to the trustee. In the trust, the settlor designates another individual, known as the beneficiary, to receive the benefit of the trust property. Although the beneficiary has the right to this benefit, he does not have control of the property; the trustee does. The trustee's broad responsibility is management of the trust property for the beneficiary. He must also manage in accordance with any express directions from the settlor in the trust.
  
  

General Trustee Duties

• The California Probate Code sets out information on trustee duties in living trusts. The Code prohibits a trustee from dealing with the trust for his own benefit, or from becoming a trustee of another trust whose interests run counter to the first trust. The trustee must keep the trust property legally separate from his own property. Trustees must distribute the assets to the beneficiary as directed by the trust (or, if the trust so states, at his own discretion.) Should the trust have multiple beneficiaries, the trustee must not show favoritism.
  
  

Prudent Investment

• Trustees have a duty to invest trust property in a prudent manner. Probate Code Sections 16045-16054 (the "Uniform Prudent Investor Act") set the parameters for trustee investment of the trust property. The Act requires that the trustee evaluate all individual transactions as part of a unified plan of investment and consider how they affect the trust as a whole and sets forth important factors for the trustee to consider when making investment decisions.
  
  

Accounting to Beneficiaries

• The Probate Code demands that the trustee keep the beneficiaries informed about trust status, trustee actions and certain events affecting the trust. Unless the trust says otherwise, the trustee must tell the beneficiary the terms of the trust and other trust information upon the beneficiary's demand.
  
  

Limits on Power

• Upon request by a beneficiary, a court can always decide to intervene in a trust if it finds such action warranted. The court may evaluate the trustee's performance and look at the trustee's specific actions.