It has become more common for trustors to select someone who is not a beneficiary of the trust estate, often a close relative, to serve as trustee. While the “crown” of trusteeship imbues that trustee with tempting powers – including over that mound of “gold” sitting in the trust – it also comes with duties that must be followed. As Uncle Ben cautioned Peter Parker, “With great power comes great responsibility.”

A trustee generally has a duty to remain neutral in a dispute over who is the rightful beneficiary under a trust that involves no attack on the validity or assets of the trust itself. As the courts held in Whittlesey v. Aiello (2002) 104 Cal.App.4th 1221 and Terry v. Conlan (2005) 131 Cal.App.4th 1445, this duty means that a trustee cannot spend from a trust to favor one side over another. But does this duty not to meddle in beneficiary clashes apply even when a trustee is not a beneficiary, with nothing to gain?

In a prior post, we explained how this was one of the questions that Whittlesey and Terry left unresolved. Enter Zahnleuter v. Mueller (2023) 88 Cal.App.5th 1294, an appeal that Downey Brand LLP successfully defended. The Court of Appeal has now held that, yes, the duty to remain neutral applies to all trustees regardless of beneficial interest.