By Corcoran Smith Law Corp. · Updated
Trustee Surcharge Under Probate Code 16440: Making a Trustee Pay Personally
A surcharge makes a California trustee pay personally for a breach of trust. Probate Code section 16440 makes the applicable loss, trustee-profit, or lost-profit measure available as appropriate under the circumstances, subject to the court’s statutory discretion.
What a trustee can be charged with
California measures a trustee’s liability for breach of trust under Probate Code section 16440, which sets three alternatives. As appropriate under the circumstances, a trustee is chargeable with any loss or depreciation in the value of the trust estate resulting from the breach, with interest; with any profit the trustee made through the breach, with interest; or with any profit that would have accrued to the trust estate where the loss of that profit resulted from the breach. That third measure matters more than it looks, because it reaches the trustee who did nothing — the one who left a property empty, or funds uninvested, while the estate lost ground. The claim is brought as a petition under section 17200 concerning the internal affairs of the trust, commonly alongside removal. The statute also supplies the trustee’s defence: where the trustee acted reasonably and in good faith under the circumstances as known to them, the court may in its discretion excuse liability in whole or in part where doing so is equitable.
Sources: Probate Code s.16440 - Measure of liability for breach of trust · Probate Code s.17200 - Petitions concerning internal affairs of trust · Verified 2026-09-21.
The three measures, in plain terms
| Measure | What it captures | Typical fact pattern |
|---|---|---|
| Loss or depreciation, with interest | What the trust is worth less | Property sold below value; funds spent on the trustee’s own costs |
| Trustee’s profit, with interest | What the trustee gained | Living rent-free in trust property; taking undisclosed compensation |
| Profit the trust would have made | What inaction cost | A rental left vacant for years; cash left idle while the estate carried debt |
Probate Code section 16440, subsection by subsection
| Part of section 16440 | What it does | What to prove |
|---|---|---|
| (a)(1) Loss or depreciation, with interest | Restores what the trust lost | The trust’s value with and without the breach |
| (a)(2) Trustee’s profit, with interest | Strips what the trustee gained, even if the trust lost nothing | The benefit the trustee received through the breach |
| (a)(3) Profit the trust would have made | Captures lost gains from inaction or misuse | What the property would reasonably have earned |
| (b) Good-faith excuse | Lets the court excuse liability in whole or part | The trustee must show reasonable, good-faith conduct; the court decides whether excusing it is equitable |
What interest a surcharged trustee pays
Two of the three measures in section 16440 carry interest, and section 16441 sets how much. Where a trustee is liable for interest under section 16440, the trustee is liable for the greater of two amounts: interest at the legal rate on judgments in effect during the period the interest accrued, or the interest the trustee actually received. The rule works against a trustee who put trust money to profitable use, because the trust takes the actual return if it is higher, and it protects the trust where the money sat idle, because the legal rate is the floor. The same good-faith discretion applies here as in section 16440: where the trustee acted reasonably and in good faith under the circumstances as known to them, the court may excuse the interest liability in whole or in part if that would be equitable.
Sources: Probate Code s.16441 - Interest on trustee liability · Probate Code s.16440 - Measure of liability for breach of trust · Verified 2026-09-17.
How long a beneficiary has to seek a surcharge
A surcharge claim is a claim for breach of trust, so the limitation in section 16460 applies. If a beneficiary received a written account or report that adequately disclosed the claim, the claim is generally barred unless a proceeding is started within three years after receiving it; an account adequately discloses a claim if it gives enough information that the beneficiary knows of the claim or reasonably should have inquired. If no account or report adequately disclosed it, the three years run from when the beneficiary discovered, or reasonably should have discovered, the subject of the claim. Surcharge is one of several remedies section 16420 makes available for a breach: a beneficiary can also compel performance, enjoin a threatened breach, appoint a receiver or temporary trustee, remove the trustee, set aside the trustee's acts, reduce or deny compensation, and trace wrongfully transferred property.
Sources: Probate Code s.16460 - Limitation on claims against a trustee · Probate Code s.16420 - Remedies for breach of trust · Verified 2026-09-17.
Why this is the claim that recovers money
Removing a trustee changes who holds the keys. It does not, by itself, restore anything. A surcharge reaches the trustee’s own assets, and it is the reason a case with a depleted trust can still be worth bringing — the money need not still be in the trust for the court to order it back into one.
Related: the breach that supports the claim, removal under §15642, compelling the accounting that proves it, what a trustee may properly charge, and who pays the fees.
Common questions
What is a trustee surcharge in California?
A surcharge makes a California trustee pay personally for a breach of trust. Under Probate Code section 16440, the trustee is chargeable with any loss or depreciation in value of the trust estate resulting from the breach, with interest; any profit the trustee made through the breach, with interest; or any profit that would have accrued to the trust estate had the loss of profit not resulted from the breach. A surcharge reaches the trustee's own assets.
Can a trustee be surcharged for doing nothing?
Inaction can support a surcharge. The third measure of liability in California Probate Code section 16440 charges a trustee with any profit that would have accrued to the trust estate where the loss of that profit resulted from the breach. That measure reaches a trustee who did nothing, such as one who left a rental property vacant for years or left cash idle while the estate carried debt.
Can a trustee avoid a surcharge by showing they acted in good faith?
California Probate Code section 16440 supplies a defense for trustees. Where a trustee acted reasonably and in good faith under the circumstances as known to them, the court may, in its discretion, excuse the trustee's liability in whole or in part where doing so is equitable. The statute requires both reasonableness and good faith, and it leaves the decision to excuse liability to the court's discretion.
Can a California trustee be made to repay money that is no longer in the trust?
A surcharge reaches the trustee's own assets, so the money need not still be in the trust for a California court to order it back into one. Removing a trustee changes who holds the keys but does not, by itself, restore anything. A surcharge claim is brought as a petition under Probate Code section 17200 concerning the internal affairs of the trust, commonly alongside removal of the trustee.
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Call Anytime — Answered 24/7 · (213) 695-7353The Probate Code sections behind this page
Each section links to its official text at the California Legislature’s own site. The full index of sections covers the rest of the Code.
- Probate Code section 16440
- Measure of liability for breach of trust. Read section 16440
Also cited above, explained elsewhere on this site
- Probate Code section 17200
- Petitions concerning internal affairs of trust. Where section 17200 is explained
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