Recent Judicial Council of California Court
Statistics confirm that Los Angeles probate and mental health court trials total over
14,000 per year. Many of these trials involve beneficiary allegations
of wrongdoing against a trustee or battles to remove an existing trustee. So what is the background that sets the stage
for trustee disputes in LA? We start with noting that a living trust becomes
irrevocable at the death or incapacity of its maker. New trustees are often appointed when the
trust becomes irrevocable or when conflicts arise between a beneficiary and the trustee. Conflicts between former trustees and new
or successor trustees often arise when the successor trustee requests some, if not all,
documents in the possession of the former trustee or the former trustee’s attorney. A California Court of Appeal recently addressed
this issue in Fiduciary Trust International of California v. Klein (2017) 9 Cal. App. 5th 1184 (hereinafter referenced as “Klein”). The lessons of the Klein decision are worth
repeating. So whether a trustee was removed by court
order or voluntarily resigned the attorney-client privilege protects the “client.” Klein makes clear that the client is the office
of the trustee rather than the particular trustee. A trustee has the obligation to preserve trust
property. Such property includes the trust’s legal
files. The power to assert the confidential communications
privilege moves to the successor trustee. If this were not so the successor trustee
would be unable to do his or her job in protecting and preserving trust property. A predecessor trustee should not be allowed
to interfere with or prevent the transfer of attorney-client trust files to the new
trustee. The very narrow exception to this rule is
when a predecessor trustee distinguishes, scrupulously and painstakingly, his or her
own interests from those of the beneficiaries of the trust. Moreover, a California Supreme Court case
notes that if a predecessor trustee seeks legal advice in his own personal capacity
(not in his capacity as a trustee) and pays for the advice out of his own personal funds
he may be able (not shall be able) to avoid disclosing the advice to a successor trustee. Now trustee succession battles can be brutal. Discovery of legal files and attorney-client
communications with the predecessor trustee can be protracted. That said, the Klein case gives guidance and
hope to those successor trustees who require the trust’s legal files to protect trust
assets and prevent any further harm to trust beneficiaries. Hackard Law is dedicated to safeguarding the
beneficiary rights of Los Angeles clients. If you are facing a problem trustee or other
threats to your family’s inheritance, you can call us at 213-357-5200. We look forward to hearing your story and
seeing how we can best help you. Thank you.