Secretive Living Trust Trustees Are A Warning Sign
A secretive trustee of a living trust is a serious danger signal to the trust beneficiaries. Living trusts have become wildly popular in California as a means of transferring an estate to the next generation. Unlike wills, correctly designed living trusts are intended to “avoid probate” and allow a designated “successor-trustee” to handle the estate without court involvement after the creators (the “trustors”) have passed away.
When this scheme works well it can be a cost-effective and quick way to handle even a large estate. Probate costs money and takes time. However, living trusts can have their own problems and pitfalls and living trusts are not a panacea. One of the most significant warning signs for beneficiaries is when a successor-trustee of a trust is secretive and uncommunicative.
California law requires a successor-trustee to provide a statutory notice pursuant to California Probate Code 16061.7 to beneficiaries of a trust; such notice is often referred to as a “120 day letter”. This notice advises the beneficiaries that the trustors have passed away, various other matters including the fact that they are, in fact, beneficiaries. It also advises beneficiaries that they are entitled to receive a copy of the trust. Conscientious trustees usually attach a copy of the trust to the notice letter.
Unfortunately, it is not uncommon that successor-trustees fail to comply with the notice requirements of Probate Code Section 16061.7. Further, under most circumstances successor-trustees are required to provide beneficiaries with an accounting of the trust assets at least once per year, when the successor-trustee changes, or when the trust is dissolved. This enables beneficiaries to monitor the financial affairs of the trust. Unfortunately, many successor-trustees decline to do this.
When a successor-trustee is secretive and uncommunicative it is a warning sign. A living trust is designed to operate without any court supervision. Thus, normally the only “watchdog” over the successor-trustee are the other beneficiaries of the trust. In our Firm’s experience, when a successor-trustee is secretive this often indicates that he or she is not carrying out the terms of the trust. It is not uncommon for successor-trustees to regard themselves as the “owners” of the trust. Often they abuse their roles by taking excessive trustee fees, by using trust assets for their personal benefit, or by making distributions that violate the terms of the trust. Not uncommonly, successor-trustees come up with arguments that certain assets of the trust belong to the successor-trustee. Abusive successor-trustees often retain aggressive legal counsel who represents the successor-trustee against the beneficiaries.
When these things occur, the beneficiaries need legal counsel of their own. There are straightforward legal remedies to misbehaving living trust successor-trustees. If you are in this kind of situation, Buffington Law Firm invites you to contact us for a free legal consultation. In this consultation you will speak directly with an experienced trust dispute attorney. All consultations are absolutely confidential and protected by attorney-client privilege, and there is never any obligation.