Under Probate Code 16440(b), a court has the discretion to excuse a trustee from liability for a breach of trust if (a) it would be equitable to do so, and (b) the trustee acted reasonably and in good faith under the circumstances he then knew to exist in committing a breach of trust. Here, the Court of Appeal holds that the trial court did not abuse its discretion in invoking this provision to absolve an elderly trustee of liability. The trust gave an elderly man, who was the trustor’s life-long friend, a life estate in the trustor’s residence so long as he paid certain expenses. He fell behind in paying those expenses when he became quite old, developed dementia, and had virtually no money. The trustee acted reasonably in not evicting him to sell the residence sooner for the benefit of the residuary beneficiary, the plaintiff charity. Similarly, the trustee’s failure to sell the residence sooner after the elderly man’s death was excusable on the ground of the trustee’s own bad health, and the plaintiff charity suffered no harm since the property appreciated in value in the interim.
California Court of Appeal, Fourth District, Division 3 (Moore, J.); October 17, 2018; 28 Cal. App. 5th 283