Trust Litigation Attorneys at KJM Law

Family trustees arguing in living room over their father's California trust and will

What is Trust Litigation?

Trust litigation involves a lawsuit usually filed in the county where the trustee of a trust lives It may be in the form of a challenge to an estate plan that included a trust or it may challenge the actions of a trustee or trustees. A trust is a mechanism used by tax and estate planning lawyers to transfer property or assets. A trust in some sense is the legal equivalent to a bucket that contains assets. For example a trust can be formed to hold real estate or stocks, bonds, or other kinds of assets. The trust is created by a trustor or settlor. The document that creates the trust includes instructions as to how the property in the trust should be used. It also appoints a trustee, who is authorized to manage the trust in accordance with the instructions in the trust document. In a trust the trustee is instructed to manage the assets in the trust for the benefit of a beneficiary. As the name suggests, beneficiaries are the people who have been designated to be benefited by the assets in the trust.  Trust litigation involves a lawsuit relating to the trust and will be a controversy regarding some combination of the settlor, trust terms, trustee, beneficiaries, and the assets in the trust. Trust litigation matters are heard in probate divisions of Superior Courts in California. They are a form of civil (non-criminal) litigation and are often filed in state court in the county where the trustor or trustee lives, or where the trust assets are located.

Do I Need a Trust Litigation Attorney?

You may benefit from the expertise of a trust litigation attorney if you are involved in a potential or actual dispute involving the trustor, trustee, beneficiary or the assets in the trust. For example, the trust document (sometimes called the trust instrument) may instruct the trustee to manage and distribute the property in the trust for the health, education, maintenance, and support of one or more beneficiaries. A beneficiary named in the trust document may feel that the trustee is not following the instructions in the trust. Likewise, someone who is not named as a beneficiary may feel that they should have been named a beneficiary but were improperly excluded. Trustees may want to defend themselves from a lawsuit alleging that they acted improperly. Moreover, if the asset in the trust is a corporation or a piece of real estate, a creditor may want to sue the trust to be paid money that they allege they are owed.  In all of these examples, experienced trust litigation lawyers can advise you about your rights in connection to the trust.  

Who Can Contact a Trust Litigation Attorney?

Anyone who is a trustor, trustee, or beneficiary or a credit of the assets in the trust might be involved in a potential or actual dispute involving the trust, and therefore may need to contact a trust litigation lawyer. 

The language that creates the trust, called the trust document, will explicitly identify who the trustee is and often it will also name or identify a backup trustee, who will serve in the event that the primary trustee or the named trustee isn’t available to carry out the duties as the trustee. Therefore there is rarely a dispute as to who is a trustee. People know when someone passes away and oftentimes before the person passes away you are advised that they are going to be the trustee for a particular trust. Sometimes the trustee is an individual, such as a relative of the trustor. The trustee can be a professional (sometimes referred to as a professional fiduciary).  This will happen, for example, if the assets in the trust involve a complicated business and the trustor wants the corporation to be managed by a professional as opposed to a family member. The trustee may also be what is known as a corporate trustee, a large financial company which can manage complex assets.

It is often also clear who the beneficiary is because the trust document specifically identifies who the beneficiaries are, and the relationship between the beneficiaries and trustor. It is not uncommon for a trust to name a primary beneficiary and a back-up beneficiary (also called a contingent beneficiary) should something happen to the primary beneficiary before the trustor passes. Thus, both named and contingent beneficiaries should contact a trust litigation lawyer if a dispute arises. Likewise, someone who feels that should have been named as a beneficiary may also benefit from the services of a trust litigation lawyer. An experienced trust litigator can help you figure out what rights you have.

What is the Court Process Like?

Probate litigation is a form of civil litigation, so it follows many of the same rules that apply to other non-criminal lawsuits. In California, trust litigation takes place in a separate division of the court called probate court. 

Generally speaking, people involved in trust litigation don’t just sue out of the blue. They often try to reach an agreement by themselves. A trust litigation lawyer can increase the chances of successfully resolving a dispute before a lawsuit is filed.  This may involve the lawyer writing a letter on their letterhead. If the letter and negotiations do not end the dispute, a lawsuit can then be initiated.

 A lawsuit in probate court begins with the filing of a petition. This is where a trustee, beneficiary, or creditor, alleges that someone related to the trust or trust assets has broken the law.  If you have been named in the lawsuit or have been formally provided with the lawsuit (also referred to as being served), you should immediately contact a trust litigator. This is because once you have been served with the lawsuit, you have a certain number of days to respond to it. Most lawsuits follow one of two paths at this point.  The party that has been sued may file papers in court seeking to dismiss all or part of the petition. This is known as a demurrer. Alternatively, the party may file an answer to the petition, which generally involves denying key allegations set forth in the petition. In probate court this is known as an objection. If the lawsuit does not get dismissed, it will enter into a phase during which the parties exchange information. This is called the discovery stage.  The court may in some cases convene a hearing with witnesses, which is similar in some respects to a trial, before deciding the parties’ rights.  

Many probate litigation disputes reach a settlement before they ever get to a trial. Most courts including the court in Los Angeles encourage/require those involved in trust litigation cases to try to settle their disputes at a mediation. It is also common for a case to settle by having the lawyers involved communicate with each other on behalf of their respective clients.

The duration of trust litigation depends on a variety of factors, including the nature and complexity of the trust assets involved, the nature of the allegations, and the relationship between the parties.  The more money involved and the more contentious the parties, the longer a case takes on average. In our experience most cases in which a petition has been filed get resolved between 6 and 24 months.

KJM Law Trust Litigation Services

Breach of Fiduciary Duty

Allegations that a trustee breached their fiduciary duty are one of the most common lawsuits filed in trust litigation by beneficiaries. One recurring pattern involves allegations that the trustee didn’t follow the instructions in the trust, or the requirements set forth in the law. For example, a trust may often have language that says that the assets of the trust are supposed to be used for the care, maintenance, and support of the beneficiaries. A lawsuit might take the form of the beneficiary suing the trustee, alleging that the trustee didn’t pay enough trust funds to accomplish these goals. Breach of fiduciary cases also involve allegations of active misconduct on the part of the trustee. For example, that the trustee embezzled funds or from the trust or mismanaged trust assets for their own personal benefit. We have worked on filing lawsuits on behalf of the beneficiaries alleging a breach of fiduciary duty by the trustee and we’ve also worked on cases where we are defending the trustee from allegations that they breached their fiduciary duty.

Disputed Trust Accountings

An accounting is one of the more powerful tools that someone involved in a trust litigation dispute can invoke. An accounting is a process by which you can request that the trustee detail they have spent money in the trust or where money has gone. For example, a beneficiary may feel that the trustee is spending too much money on improper things, but they don’t know where the money is going. When you want to trace where money has gone, a court-ordered accounting is a strong remedy. On the other hand, a trustee often wants to produce an accounting for a court to show all beneficiaries that they are performing their duties correctly. After producing their accounting, they will get an order from the court approving the accounting.

Accountancy can be especially useful in connection with a family-owned business, when a family member refuses to share financial or related information with other family members who are legally entitled to have access to the information. The accounting process can be expensive as it may require forensic accountants to be hired to trace the money.  It is not uncommon for disputes to arise about who is responsible for paying for the costs of the accounting and in what proportion. An experienced trust litigation lawyer can advise you about the potential benefits and costs of seeking an accounting.

Trustee Removal

Generally speaking, courts are in favor of carrying out the wishes spelled out in the trust. It is therefore not easy to get a trustee removed but it is possible. When trustees violate their duties or fail to carry out the duties spelled out in the law, a court may order the removal of a trustee. For example, continued lack of communication or failure to provide beneficiaries and others with required notices may lead to the removal of a trustee. Moreover, even the threat of removal can make the trustee more responsive and cooperative. We have used this tool as we have been on both sides of that dispute, both alleging and getting trustees removed, and defending trustees from allegations or attempts to remove them.

Trust Disputes between Co-trustees

When a trust is created it is possible to have more than one trustee. The most common example of that is a parent with a trust and having two or more children be the co-trustees.  When the siblings are co-trustees, it’s a good example of what could possibly go wrong. The trustees may not get along, or they may have different ideas about how to handle the assets in the trust. One co- trustee may think the other co-trustee is acting improperly in extreme examples. You could have one co-trustee seeking to remove the other co-trustee. Those are the kinds of issues that come up and the most common example of where this might go wrong. This can be especially difficult in situations where there are two trustees, but the trust instrument specifies that the co-trustees must be unanimous in order to make decisions, leading to stalemates where no decisions are made.  

Petitions for Instructions

One of the things you can do in trust litigation as a way to resolve disputes is to ask the court to provide you with instructions as to what to do next.

This happens when the trust or the law isn’t particularly clear, or the other side is refusing to follow instructions. 

For example, a beneficiary may seek to have trust assets spent in a particular way. If the trustee, co-trustee or another beneficiary disagrees, it may become necessary to go court and seek an order for the court instructing the trustee that the money may be spent in a particular manner. Petitions for instructions are especially helpful to provide clarity about what is not permissible in an ambiguous situation. 

Examples of KJM’s trust litigation experience involving trustees include the following:

  • We represented a daughter in probate litigation where the trust company was requesting instructions from the court as to how to properly value trust assets when beneficiaries were unable to agree on valuation methods. Three months after engagement and following discussions between beneficiaries, we reached an agreement on valuation nearly three years after the death of the creator of the trust. Assets included a home in the Hollywood Hills. KJMLAW Partners mediated to reach an agreement with the sibling who was holding out. One sibling argued over a $90,000 payout to be split between all four siblings. We explained that the divided amount (about $20,000 each) was not substantial enough to fight over in court. This was an L.A. Superior Court case.
  • In 2018, we represented a former trustee who had been sued as an individual by the tenant of a property owned by the trust. This was a case in L.A. County Superior Court. We worked with council for the professional fiduciary who was appointed as the successor trustee by the court and helped to settle the case without payment of any damages by our client or the trust.

What Leads to a Trust Litigation Lawsuit?

Trust litigation lawsuits are usually the result of the inability of the trustees, co-trustees, and beneficiary to agree on a course of action. After they have tried and failed to resolve disputes by themselves or are unsure about their rights and options moving forward, one of them is likely to bring in a lawyer. This is especially true of disputes between family members.

If they’re beneficiaries, they will try to talk to the trustee. But when people feel that they are being ignored or that they can’t get information, can’t get feedback, or they feel that that the other people involved in this process are being unfair, they can talk to a trust attorney and find out what their rights are. If the lawyer says they have rights, the lawsuit is filed to enforce those rights. Sometimes it is done more out of necessity, for example if you are a creditor of a business and the business owner dies, it can often be hard to get any feedback. When there is no one to talk to, sometimes you have to go to court to get the record to establish that you’re a creditor through a court order. That’s how you are going to get paid. These are the most common ways in which trust litigation can get started.

KJM’s Top Tips for Litigation Success

Our tips for maximizing your changes of being successful during trust litigation are: 

  • Recognize you have rights and don’t wait too long, especially if you are a beneficiary. You may have statutory deadlines by which you have to challenge certain things, and these can often be short.
  • If you are a trustee, put everything in writing to explain why you are making certain decisions. 
  • If the other party isn’t sharing financial information go and find out what your rights are immediately.
  • If you have access to key documents, it is very helpful for you to collect and share these with your lawyer- trust document, key correspondence, emails, texts, hard copy documents
  • Trust litigation tends to be emotional because it involves money, assets, disputes with family.  Be aware of this to manage your and other people’s emotions.
  • Trust litigation often involves the court finding what is reasonable under the circumstance. Act reasonably whether a beneficiary, trustee or creditor. This tends to get a more favorable outcome. 
  • Work with an experienced trust litigator and recognize many estate planning lawyers do not litigate. In other words, the lawyer and law firm that drafted the trust and revised it when the trustor often takes on filing or defending a lawsuit relating to the will.  This is partly a matter of personal preference, as some lawyers who draft trusts don’t want to be involved in litigation. And where the lawyer who drafted a trust is likely to be a witness in a lawsuit involving the trust, the rules may prohibit the trust attorney from handling the related lawsuit. 

CALL KJMLAW PARTNERS TODAY FOR ASSISTANCE WITH YOUR CALIFORNIA TRUST LITIGATION CASE

The complexities of contested wills, trusts, and estates require skilled attorneys who not only know exactly how to handle the disputes but also remain sensitive to the needs and desires of the family members involved. Cases involving loved ones who may feel omitted unfairly from a will or victims of undue influence can lead to severely damaged bonds and relationships. We work diligently to reduce the stress and angst associated with these disputes and to see to our client’s success.

If you are a beneficiary, trustee, or creditor or are otherwise in need of assistance in connection with a trust dispute, please call our office at (626) 568-9300.