What is the fiduciary relationship between a trustee and the beneficiaries?
The fiduciary relationship between a trustee and beneficiaries is a special type of legal relationship in which the trustee is duty-bound to act in the best interests of the person who is the beneficiary of the trust. The trustee is required to use the trust assets solely for the benefit of the beneficiary and must not act to further the trustee’s own interests. In California, the trustee must comply with rules and regulations set forth by the Probate Code as well as comply with laws that govern the operation of trusts generally. A trustee has a duty of loyalty to the beneficiaries, meaning they must always put the beneficiaries’ interests above all others. This includes not engaging in self-dealing (e.g. using trust assets for their own benefit), not taking unreasonable risks with the trust assets, and not breaching any other fiduciary duties set forth in the trust agreement. The trustee must also follow rules and regulations for administering, managing, and distributing trust assets as set forth by the court, and must also keep reliable records of all trust transactions. If a trustee acts outside of the boundaries of the fiduciary relationship and breaches any of the trust’s stipulations, the beneficiary has a legal right to sue the trustee for damages.
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