Trust administration can be challenging. Layperson trustees are not really trained
for the tasks. And, professional fiduciaries can occasionally
go off track. Lack of transparency is an ignition switch
for controversy. Controversy that can flame into expensive
and emotional trust litigation. So, is it a good thing to avoid litigation? Unquestionably. With this in mind, I’ll share some things
that were catalysts for estate and trust disputes that we’ve litigated. The seeds of controversy include a misunderstanding
of the trustee-beneficiary relationship. The relationship is a fiduciary relationship. That is to say that the trustee, the fiduciary,
has the duty to act for the benefit of the beneficiary within the scope of the trust
relationship. The trustee should not profit at the expense
of the beneficiary. The trustee holds property, both real and
personal, for the benefit of the beneficiaries. So, how do things go sideways? Some trustees lack recordkeeping that identifies
income and payments made to a trust. This recordkeeping should include receipts. The lack of a proper accounting from a prior
trustee can be more than troubling. In mishandled trusts, it is not unusual to
discover that property or income taxes have not been paid. The asset value of California trusts is heavily
weighted in the family home. Beneficiaries not living in the family home
are none too pleased when the trustee or other beneficiaries are living in the home and not
paying rent. This is a failure on the trustee’s part
to make the trust assets productive. Trustees often fail to transfer trust assets
into an irrevocable trust required to be formed at the death of first spouse to die. Essentially, the original trust might require
that half of all assets are to be put into an irrevocable trust with the remaining half
left in a revocable trust that can be changed by the surviving spouse. This failure can be especially perilous for
the beneficiaries vested in the irrevocable trust. They might see their beneficial interests
vanish because of a trustee’s lackadaisical, negligent or maybe even intentional violation
of the trust terms. It is, of course, not helpful if the trustee
is borrowing trust money for this own benefit. Even if there is an intention to return the
money, this is a bad practice. Some trusts allow the borrowing under a defined
set of circumstances. These are only a few of the ways that trust
assets may be mishandled. Vigilance, requested accountings, proper recordkeeping,
and transparency all help to reduce the beneficiary’s exposure to loss of trust assets. At Hackard Law we are a little like health
care providers. We prefer wellness for trust beneficiaries
rather than the need for judicial intervention. We know that the vast majority of trusts are
appropriately handled and open and close without the need for litigation attorneys. That’s good. But when judicial intervention seems necessary,
we take substantial cases where we think that we can make a significant difference and there
is a wrongdoer who can be made financially accountable for their wrongdoing. The primary venues in which we practice include
the probate and civil courts of Los Angeles, Orange, Santa Clara, San Mateo, Alameda, Contra
Costa and Sacramento Counties. If you are a beneficiary and you would like
to discuss your circumstances with us, call us at Hackard Law: 916 313-3030. We’ll be happy to hear from you. Thank you.