Hiring help: what California law says about delegation

The duty not to delegate

§16012 states the starting point: the trustee may not delegate to others the performance of acts that the trustee can reasonably be required to perform personally, and may not transfer the office of trustee or the entire administration of the trust to another — subject to the rules for co-trustees and to the prudent investor rule.

Hiring advisers and delegating investments

Within that line, help is expected. §16247 gives the trustee the power to hire persons, including accountants, attorneys, auditors, investment advisers, appraisers or other agents, even if they are associated or affiliated with the trustee, to advise or assist the trustee in the performance of administrative duties. For investment and management functions, §16052 allows delegation as prudent under the circumstances, exercising prudence in selecting the agent, establishing the scope and terms of the delegation consistent with the trust's purposes and terms, and periodically reviewing the agent's overall performance and compliance with the terms of the delegation.

The account shows the help: §16063(a)(4) lists the agents hired by the trustee, their relationship to the trustee, if any, and their compensation.

When the trustee answers for an agent

Generally, a trustee is not liable to a beneficiary for the acts or omissions of an agent (§16401(a)). The exceptions track the care the delegation required: the trustee is liable for an agent's act that would be a breach if the trustee committed it where the trustee directed the act, delegated what the trustee had a duty not to delegate, did not use reasonable prudence in selecting or retaining the agent, did not periodically review the agent's performance, concealed the act, or neglected to take reasonable steps to compel redress of a wrong the trustee knew of (§16401(b)).

Paying for help

The trustee may pay reasonable compensation of the trust's employees and agents from the trust (§16243), and expenditures properly incurred are repaid to the trustee (§15684). Hiring a relative or a business connected to the trustee brings the duty of loyalty (§16002) and the account's disclosure of the relationship (§16063(a)(4)) into focus.

The statutes, verbatim

• Duty not to delegate

  Prob. Code §16012 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Delegation of investment and management functions

  Prob. Code §16052 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Power to hire advisers and agents

  Prob. Code §16247 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

Common questions

Frequently asked questions

Can a California trustee hire a lawyer or an accountant?

Yes: §16247 gives the power to hire accountants, attorneys, auditors, investment advisers, appraisers and other agents to advise or assist, and the account lists each agent and the agent's compensation (§16063(a)(4)).

Can a trustee hand the whole administration to someone else?

No. §16012 forbids transferring the office or the entire administration, and delegating acts the trustee can reasonably be required to perform personally.

Is a trustee liable for an adviser's mistakes?

Generally not (§16401(a)), unless the trustee directed the act, delegated what could not be delegated, was imprudent in selecting or keeping the agent, failed to review the agent periodically, concealed the act, or failed to pursue redress of a known wrong (§16401(b)).

General information about California law, not legal advice.