TRUST AND ESTATE LITIGATION

A party administering a trust is a trustee.  A party appointed by a court to administer a decedent’s estate in probate is an executor.  Both trustees and executors are fiduciaries, meaning they have an obligation to carry out all duties in the best interest of the decedent’s beneficiaries or heirs.  Failure to carry out their duties as prescribed by law may result in the removal of the trustee or executor and/or an award of damages to the beneficiaries or heirs for the trustee’s or executor’s breach of duty.

Duties of a Trustee

Pursuant to Probate Code § 16000, et seq., trustees have the following duties:

  1. To administer the trust according to the terms of the trust instrument.

  2. To administer the trust solely in the interest of the beneficiaries.

  3. To deal with all beneficiaries in an impartial manner and take into account specific needs any beneficiary may have.

  4. To only use trust assets for the benefit of the trust and never for the trustee’s own benefit.

  5. To never engage in a transaction which places his or her own benefit above the interests of the beneficiaries.

  6. To never condition distribution of trust assets on the beneficiaries relieving the trustee of any liability to the trust.

  7. To never become trustee of another trust that is “adverse in its nature to the interest of the beneficiary of the first trust.”

  8. To reasonably act collect and preserve trust property.

  9. To make the trust property productive using generally accepted investment strategies.

  10. To clearly identify all trust property and must never comingle trust property with his or her property.

  11. To reasonably enforce claims of the trust and defend against legal actions that could harm the trust financially.

  12. To personally perform duties that he or she should reasonably be required to fulfill, while engaging the assistance of specialists to protect trust assets.

  13. To keep beneficiaries reasonably informed as to actions or events that materially affect the interest of the trust’s beneficiaries.

A breach of duty by a trustee or executor is a serious matter.  Beneficiaries and heirs may petition the court to review the actions of the trustee or executor to determine if a breach of duty has occurred.  To challenge the actions of the fiduciary or to seek review of a fiduciary’s conduct, the beneficiary or heir must file a petition with the property court.  After filing the petition and providing all parties with notice, a court will schedule the matter for hearing.  At the hearing, the court may request evidence and testimony as to the allegations pled and any defenses that may be raised by the trustee or executor.

Removal of a Trustee

Under Probate Code § 15642, the grounds for removal of a trustee may include the following:

(1) Where the trustee has committed a breach of the trust.

(2) Where the trustee is insolvent or otherwise unfit to administer the trust.

(3) Where hostility or lack of cooperation among cotrustees impairs the administration of the trust.

(4) Where the trustee fails or declines to act.

(5) Where the trustee’s compensation is excessive under the circumstances.

(6) Where the sole trustee is a person who drafted the trust, whether or not the person is the transferee of a donative transfer by the transferor, unless, based upon any evidence of the intent of the settlor and all other facts and circumstances, which shall be made known to the court, the court finds that it is consistent with the settlor’s intent that the trustee continue to serve and that this intent was not the product of fraud or undue influence.

Removal of an Executor

Pursuant to Probate Code § 8502, the grounds for removal of an executor may include the following:

(a) The executor has wasted, embezzled, mismanaged, or committed a fraud on the estate, or is about to do so.

(b) The executor is incapable of properly executing the duties of the office or is otherwise not qualified for appointment as executor.

(c) The executor has wrongfully neglected the estate, or has long neglected to perform any act as executor.

(d) Removal is otherwise necessary for protection of the estate or interested persons.

(e) Any other cause provided by statute.

Litigating trust and estate matters is a complex procedure containing may pitfalls if not conducted properly.  It is strongly recommended that one should seek the advice of an experienced estate attorney before proceeding with litigation.  Call our office at (916)436-5210 or schedule a free one-hour consultation to discuss your matters today.