There are certain problems with California Living Trusts that seem to come up over and over again. Perhaps the most common scenario is one that involves the now-deceased Trustmakers’ home. Buffington Law Firm’s trust litigation attorneys have dealt with this problem constantly, in literally dozens of cases, in just the past several years. The scenario is usually involves a situation in which the successor-trustee takes physical possession of the Trustmakers’ home after (or sometimes even before) the Trustmakers pass away. In California it is not uncommon that the Trustmakers’ home is the most valuable asset of their Trust, and often it comprises the bulk of the Trust estate assets. Homes in California are usually quite valuable, as we all doubtless know. More often than not (although certainly not always) the Trust provides that the Trustmakers’ children will share equally in the Trust estate. Normally this would mean that the successor-trustee (“Trustee”) has a duty to list the home for sale within a reasonable time, sell it, and distribute the sale proceeds to the beneficiaries and be done with it. In this way the beneficiaries naturally have an expectation that they will receive their inheritances in a fairly clean and simple way.
Unfortunately, things do not always work out that way. Sometimes the Trustee wants to own the house, takes physical possession and moves in, and then spends years trying to get financing to buy the house from the Trust, all the while living there rent free. Buffington Law Firm’s trust litigation attorneys have even dealt with situations in which the Trustee simply moved into the Trust home and lived there rent-free with the intention of squatting there indefinitely, for as long as the other beneficiaries would put up with it. Other times the Trustee tries to buy the house from the Trust at a knock-down price that shortchanges the other beneficiaries to the Trustee’s advantage. For the Trust to operate as it is supposed to, the Trustee must do his or her job correctly. A Trustee who is engaging in this sort of self-dealing, e.g. living in the house rent-free, refusing to sell it on the open market when the Trust requires this, etc. is plainly preventing the Trust from operating the way that it is supposed to. This presents the beneficiaries with a real problem.
Fortunately, this scenario has a solution. California Probate Code Section 17200(b) gives any Trust beneficiary the authority to bring a Petition before the Probate Court to instruct the Trustee as the Court may determine to be proper, e.g. perhaps to list the Trust real property for sale and distribute the sales proceeds to the beneficiaries. Essentially, by bringing such a Petition (a form of lawsuit) the beneficiary is putting the Trust administration and the Trustee under the jurisdiction of the Court. Most counties in California handle these cases with reasonable alacrity, others not so much. But generally this is the solution to the problem of a self-dealing Trustee. Buffington Law Firm’s trust litigation lawyers have handled innumerable cases of this type, almost invariably with successful outcomes.
If you are involved in a situation involving a self-dealing Trustee, Buffington Law Firm invites you to give us a call for a Free Legal Consultation. All calls are with an experienced Trust litigation attorney, there is never any charge or obligation for the consultation, and all calls are confidential and protected by the attorney-client privilege.
By Roger J. Buffington, Esq.