Can A Beneficiary Also Be A Trustee In California?

A trustor/settlor/grantor may choose to set up a trust for various reasons, and the fact that a trust can be set up for many reasons is one of the things that makes this estate planning tool quite exciting. Generally speaking, a California trust can help a trustor accomplish nearly any goal they have with their estate. For instance, a trustor can create a trust to care for their minor children, benefit a charity, and/or provide for a surviving spouse. Another thing that makes this estate planning tool exciting is the fact that a trust brings flexibility when it comes to managing and distributing trust assets in the event of a grantor’s death or incapacity.

Trustees and Beneficiaries

A trustee is an individual who assumes the legal responsibility of the assets in a trust. The primary duty of a trustee is managing the assets in a trust and carrying out the purposes of the trust. Trustees generally oversee trust assets for the benefit of the trust beneficiaries.

Can a Beneficiary Also Be a Trustee?

So, can a trust beneficiary also be a trustee in the state of California? Yes. A trust beneficiary can also be a trustee in California. That means that one person can manage a trust and still benefit from it. A situation where a trust beneficiary also acts as a trustee can arise in a case where a trustee steps down, and the only individual available to replace them is a trust beneficiary. Also, sometimes, a trustor can simply choose to set up their trust this way.

Nonetheless, even though a beneficiary can be a competent trustee, that is not always the case. For example, a trustee who’s also a beneficiary may have a conflict of interest, especially if they are not the only beneficiary. In such a case, a trustee may decide to use trust assets for their benefit. Furthermore, sometimes, perception becomes reality. A trustee who’s also a beneficiary may act properly and follow all the laid down rules, only for them to be viewed as acting improperly because of a potential conflict of interest.

So, does this mean that a beneficiary should not be named as a trustee? Definitely not. Often, it all depends on the abilities of the beneficiary. If a beneficiary can avoid actual conflicts of interests, they may be able to do an excellent job as a trustee. Typically, a good trustee/beneficiary is one who knows their fiduciary duties and acts accordingly. If a trustee/beneficiary doesn’t know their duties, they cannot fulfill them.

All in all, the job of a trustee can be hard, and trustors should think long and hard before choosing trustees. Speaking to an estate planning attorney before deciding who to choose as a trustee is usually a good idea.

Contact The Probate Guy for Legal Help

If you need help creating a California trust, or choosing the right trustee, contact the experienced California estate planning attorney Robert L. Cohen of the Probate Guy.

Resource:

forbes.com/sites/halseyschreier/2021/04/14/understanding-the-roles-of-a-beneficiary-and-a-trustee/?sh=650809be7d51