In California, trusts have long been a favored means of estate planning. Trusts provide great flexibility can help avoid probate and often significant tax advantages.
A trust is created by a person known as the trustor or settlor, who places property in the trust and appoints a trustee to manage the property. The trustee holds legal title to the property in the trust for the benefit of those who are named as beneficiaries of the trust. The trustee must manage the property in the interests of the beneficiaries, according to the settlor’s instructions in the trust document.
To allow trustees to carry out their duties of trust administration, California law grants them broad powers. The source of the trustee’s powers is the trust document. A trustee can exercise any power listed in the document, unless doing so would conflict with state law or a court order.
The trustee has the obligation to preserve and protect the assets in the trust. The trustee’s authority therefore includes the powers to invest financial assets prudently; to pay bills necessary to trust administration; and to take out insurance on the assets.
If the trust assets include a home or other real property, the trustee is ordinarily empowered to make such repairs as are reasonably necessary. The trustee can also sell trust assets under some circumstances.
Trust administration can be complex and often requires careful interpretation of trust language in light of court decisions and the California Probate Code. An experienced estate planning lawyer can be of great assistance in advising settlors, beneficiaries and trustees, regarding the scope of trustee powers.
Source: SCSCourt.org, “Probate Trusts,” accessed on Feb. 7, 2016