Revocable or “Living” Trusts have become wildly popular in California as an alternate mechanism to wills for transferring a family’s wealth to the next generation. Lawyers who practice estate planning often tout trusts as a simpler and cheaper way to handle an estate. However, trusts are not without problems of their own and trusts are far from a panacea. Trusts are designed so that one or more “successor-trustees” can administer the trust and carry out its provisions without the need for court involvement. In this way the trust “avoids probate” which is the main advantage of a trust as opposed to a will.
Not infrequently the successor-trustee is a family member; often one of the beneficiaries. Ideally, the successor-trustee simply carries out the terms of the trust by marshalling trust assets, paying trust and estate debts, and then distributing the residue to the beneficiaries. Sometimes it really is that simple.
Other times, not so much. There are a number of potential “flash points” for disputes as between the successor-trustee and the beneficiaries. Common ones include:
- Disagreement by the beneficiaries about the liquidation of assets. This is one of the most common points of disagreement between successor-trustees and beneficiaries. For example, often one of the largest assets in an estate is the family home. Normally the successor-trustee has a duty to sell the home, thereby converting it to cash to enable distributions to the beneficiaries. Sometimes the beneficiaries argue vociforously as regards the asking price. Other times one of the beneficiaries wishes to buy the house, sometimes at an unreasonably favorable price. Often one or more beneficiaries retains legal counsel and threatens litigation. When this happens, the successor-trustee needs legal counsel as well.
- Discord Concerning Control of the Trust. Most trusts place all control in the hands of the successor-trustee. Nonetheless, it is not uncommon for a disgruntled beneficiary to make unreasonable demands and threaten litigation. Worse, some trusts contain language that a trustee must “consult” with the beneficiaries concerning certain matters. This offers fertile grounds for trust disputes.
- Issues Concerning Trustee Fees. Being a successor-trustee often entails considerable work and difficulty, and normally a trustee is entitled to receive a trustee fee. Not surprisingly, this is a common point of disagreement between successor-trustees and beneficiaries.
- Issues Concerning Trust Accounting. Under most circumstances a successor-trustee is required to provide a trust accounting. This is not a trivial exercise and the details of the accounting can be a frequent point of dispute.
Under the best circumstances a successor-trustee can carry out the terms of the trust swiftly and without controversy. Whether there is discord with the beneficiaries or not, for moderate and large estates it is often a good idea for the sucessor-trustee to retain legal counsel. Normally courts regard this as a normal and acceptable trust administration expense appropriate for payment by the trust. Buffington Law Firm’s trust attorneys have decades of experience in this area. Whether you are a trustee faced with difficult trust issues, or a trust beneficiary faced with a difficult successor-trustee, usually we can help. We invite you to contact us for a free legal consultation. All consultations are with experienced trust dispute attorneys, are completely confidential and protected by attorney-client privilege, and there is never any obligation.