The Trust Litigator’s Arsenal
The last nail is hammered into the coffin and the casket is lowered into the ground. In these moments of grief, competing heirs can find themselves engaged in forceful arguments. With the elder gone, and a substantial amount of money remaining in the trust, many things can go awry. Sometimes, in especially difficult situations, parties will refuse to see eye-to-eye on even the most basic facts. A blended family, problems with a successor trustee and hurt feelings are often at the root of trust litigation.
Of course, the majority of trust administrations go smoothly and avoid quarrels. However, even simple administrations have the potential to turn into conflicts due to arguments that didn’t bubble over until after the trustor’s death. The trust litigator must approach these cases with the greatest of care. Resolving trust disputes expeditiously requires great skill and tact. Machiavelli said it best: “Men will quickly forget their father’s death, but not the loss of their inheritance.”
This article will outline some helpful tools that trust litigators can use to resolve these situations. The California Probate Code gifts practitioners many tools that can be pivotal in helping trust litigators regain control over some of the issues outlined above.
California Probate Code §15642
California Probate Code §15642 (a)(1-6) and (e) provide a means by which interested parties can remove or suspend a trustee who is abusing his or her powers. Pending a petition for removal, a beneficiary or co-trustee can also seek immediate suspension of a trustee (Cal. Prob. Code §17206). This is usually sought in the form of emergency relief. Probate Code §15642(e) states that if it appears to the court that trust property or the interests of a beneficiary may suffer loss or injury pending the petition for removal, the court may suspend the trustee and appoint a temporary trustee.
If the beneficiary is successful in persuading the court that immediate suspension is appropriate, the court then must choose a successor trustee.
California Probate Code §§850-859
Another effective tool trust litigators can utilize is California Probate Code §850 et seq. This code section provides a method for retrieving property that was taken out of the trust. Additionally, if the property was taken out of the trust in bad faith, §859 allows for the recovery of double damages.
California Probate Code §850(a)(3)(B) states that the trustee or an interested person may petition the court where the trustee has a claim to real or personal property, title to or possession of which is held by another. Because of the broad language of this statute, it’s relatively unproblematic to gain standing to bring an “850 petition,” as they are commonly called.
A common allegation in trust litigation is that large sums of money are missing from the trust. An 850 petition provides a statutory framework by which to pursue the missing property and bring it back into the trust. Another reason why 850 petitions have the potential to become so contentious is that §859 intersects with financial elder abuse.
California Probate Code §17200
California Probate Code §17200 is the quintessential probate code for trust litigators, granting California probate courts tremendous discretion in handling trust matters. Many of the probate court’s most dynamic powers as it relates to trust litigation are derived from probate codes §§17200-17211. California Probate Code §17206 states in part: “The court in its discretion may make any orders and take any other action necessary or proper to dispose of the matters presented by the petition.” Although §17206 is seemingly expansive, there is an interesting interplay between the code sections here because §17209 states in part: “The administration of trusts is intended to proceed expeditiously and free of judicial intervention.” Although these two code sections seemingly contradict each other, as it relates to trust litigation, the court will customarily hear cases concerning serious allegations of fraud or violations of the trustee’s duties.
Code §17200(a) states that a trustee or beneficiary may petition the court regarding the internal affairs of the trust. Code §17200(b) then lists 23 different items that qualify as matters related to the internal affairs of a trust. A few of the most integral issues as it relates to trust litigation are: determining questions about the construction of the trust instrument; the validity of a trust provision; determining who should and should not get the trust property; how much each beneficiary should get; settling accounts; approving discretionary acts taken by the trustee; instructing the trustee; compelling accountings by the trustee; and appointing or removing a trustee.
The Neutral Third-Party Professional Trustee
Sometimes a trustee will fail to provide any information to beneficiaries despite written demands. This can lead to an atmosphere of distrust.
In an atmosphere of distrust, the hope of reaching an informal settlement becomes difficult. If this happens, the appointment of a professional trustee is an excellent option. A skilled professional trustee can be very helpful in bringing an end to trust disputes. A professional third-party neutral with no inheritance at stake doesn’t have a reason to get embroiled in the passions of litigation. If a trustee will not agree to step down voluntarily, a petition for suspension or removal is a common method beneficiaries can use to suspend or remove the currently acting trustee and install a neutral.
Trust litigators representing professional trustees can preserve the professional trustee’s neutral position by petitioning the court for instructions on how the court thinks they should act under §17200. This technique allows trustees to remain neutral. Another positive side to this technique is that it helps protect trustees from liability because their actions are based on the court’s explicit instructions.
Whether you become involved in trust litigation in the future or not, hopefully this article will help you to understand some of the intricacies involved in trust litigation, as well as the complications faced by attorneys, beneficiaries and trustees alike.