Common Mistakes Trustees Make in California (and How to Prevent Them)

Introduction: The Weight of Responsibility

Serving as a trustee in California is both an honor and a serious legal duty. Trustees manage trust assets for the benefit of others and are held to a high fiduciary standard. Unfortunately, even well-intentioned trustees can make costly errors that create conflict or legal exposure. Understanding the most common trustee mistakes in California can help you avoid them—and protect both the beneficiaries and yourself.

Jennifer Shelton, A Professional Law Corporation, provides trusted legal guidance to help trustees navigate California’s complex trust administration laws with confidence.

1. Poor Communication with Beneficiaries

A trustee’s duty to keep beneficiaries informed is more than a courtesy—it’s a legal obligation. Failure to provide regular updates or respond to inquiries often leads to suspicion and disputes. Trustees should share key information such as accountings, asset valuations, and progress updates at reasonable intervals.

Clear communication prevents misunderstandings and demonstrates transparency in the administration process.

2. Commingling Trust and Personal Funds

Mixing trust assets with personal accounts is one of the most serious trustee mistakes in California. Each trust must have its own bank account, and all transactions should be carefully documented. Commingling funds—even unintentionally—can result in personal liability and court penalties.

Jennifer Shelton assists trustees in setting up proper record-keeping and financial separation to ensure compliance with California Probate Code requirements.

3. Missing Tax Filings and Deadlines

Trusts often have separate tax obligations that many trustees overlook. Missing filing deadlines or failing to issue required beneficiary statements can trigger penalties from the IRS and state authorities. Trustees must also ensure that income taxes on trust assets are paid promptly and that final tax returns are filed when the trust is terminated.

Working with an attorney or CPA familiar with trust taxation helps keep these obligations on track.

4. Mismanaging Investments or Property

Trustees are required to invest and manage trust assets prudently, balancing growth with preservation. Allowing funds to sit idle, taking excessive risks, or failing to insure property can breach fiduciary duties. Proper documentation and periodic review of investment performance help demonstrate that decisions are made with care and due diligence.

5. Delaying Distributions or Ignoring Instructions

Delays in distributing assets or disregarding the trust’s written terms can frustrate beneficiaries and create legal exposure. Trustees must act according to the trust document and California law—neither faster nor slower than circumstances reasonably allow.

If the trust instructions are unclear, consulting an attorney early can prevent costly missteps.

Conclusion: Guidance to Help Trustees Succeed

Serving as a trustee doesn’t have to be overwhelming. By understanding and avoiding these common pitfalls, you can fulfill your legal duties and preserve family harmony.

If you are administering a trust or preparing to accept a trustee role, contact Jennifer Shelton, A Professional Law Corporation, for professional trust administration support across Siskiyou County, Del Norte County, and throughout California.