Trustees frequently make decisions that affect beneficiaries differently. A proposed property sale, investment change, settlement, or other significant transaction may be permissible but still likely to generate objections. A California trustee notice of proposed action offers an optional statutory process for describing the decision and giving affected beneficiaries an opportunity to object before implementation.

A trustee electing to use the procedure generally sends notice to beneficiaries who are receiving or entitled to receive trust income and to beneficiaries who would receive principal if the trust terminated at that time. A beneficiary who gives written consent does not need to receive the notice. The trustee should still determine carefully who qualifies for notice under the statute and the trust's current distribution structure.

The notice must provide contact information, describe the proposed action, explain the reasons for it, and identify when the action may occur. It must also give beneficiaries at least 45 days from delivery or receipt to object. A vague statement that the trustee plans to “manage the property” is unlikely to be as useful as a clear description of the transaction, its material terms, and the trustee's reasoning.

A beneficiary may object in writing within the period stated in the notice. When a timely objection is received, the trustee should not assume the objection can simply be disregarded. The trustee or a beneficiary may petition the probate court to approve, modify, or deny the proposed action, creating a defined process for resolving the dispute.

When proper notice is given and no beneficiary entitled to notice objects, the trustee may receive statutory protection concerning the proposed action. That protection depends on compliance with the procedure and does not excuse dishonesty, incomplete disclosure, or action outside the trustee's authority. Trustees should preserve proof of delivery, the exact notice provided, beneficiary consents, and all supporting information.

A California trustee notice of proposed action cannot be used for every decision. The statute excludes matters such as approval of trustee or attorney compensation, settlement of accounts, trustee discharge, certain transactions between the trust and the trustee or trustee's attorney, and specified claims involving those persons. A trustee facing one of those matters may need beneficiary consent, a formal court petition, an accounting proceeding, or another authorized procedure.

The notice process can encourage informed discussion by giving beneficiaries a defined deadline and enough information to evaluate the proposal. It may also reveal disputes before the trust commits to a contract or transfers an asset. However, it should not be used as a substitute for obtaining appraisals, reviewing tax consequences, evaluating alternatives, or satisfying duties of loyalty, impartiality, prudence, and disclosure.

Trustees in Los Angeles County should review both the trust document and the governing statute before relying on the procedure. This article provides general information, not legal advice, because the appropriate form of notice and the legal effect of an objection depend on the proposed action and beneficiary interests.

Key takeaways

• The trust notice procedure is optional and applies only to qualifying proposed actions.
• The notice must explain the transaction and generally provide beneficiaries at least 45 days to object.
• A timely objection may lead to a court proceeding, while no objection may provide the trustee with statutory protection.

Helpful educational links

• https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=16501.
• https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=16502.
• https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=16503.

Before sending a notice or responding to one, the trustee or beneficiary should review the proposed transaction, applicable deadlines, and possible consequences of consent or objection. Call Westlake Law Group at (818) 444-2022. 30699 Russell Ranch Road, North Building, Suite 210, Westlake Village, California. Virtual consultations are available throughout Southern California.