Buffington Law Firm’s California Trust litigation attorneys frequently deal with situations in which the Trustee of a California Living Trust refuses to distribute Trust assets at the appropriate time. Often, the appropriate time is a reasonable time following the death of the last living Trustmaker (“Trustor”). Under the terms of many, perhaps most, Trusts, the duties of lhe Trustee are to wind up the Trust’s affairs and then distribute the Trust assets to the beneficiaries in accordance with the Trust terms. The normal expectation is that all of this will be done without any intervention or involvement by the courts. This is why it is often said that a California living trust enables a Trust estate to “avoid probate.”
Unfortunately, it doesn’t always work that way. Sometimes a Trustee flat-out fails or refuses to timely distribute the Trust assets. Sometimes, for example, a Trustee simply moves into a residence owned by the Trust, proceeds to live there rent-free, and does not muster and distribute other Trust assets either, such as stock brokerage accounts, bank accounts, etc. This scenario is regrettably common. When it happens, the beneficiaries need legal representation.
Under California Probate Code Section 17200 a Trust beneficiary can petition the California Probate Court (a department of the Superior Court) to compel a distribution. This essentially is a Court Order and Judgment that a Trustee effect a distribution pursuant to the Trust terms. Usually a Petition to compel a distribution will also demand that the Trustee provide a full Probate Code conformant Trust Accounting]. This can help ensure that the distribution that the beneficiary asks for is complete and appropriate.
When a beneficiary is required to petition the Probate Court to compel an appropriate distribution, he or she may be entitled to attorney’s fees. While the normal rule in Trust litigation is that a beneficiary must bear his or her own attorney’s fees even if the beneficiary prevails, the California Court of Appeal has determined that Probate Code Section 17211(b), which provides for attorney’s fees for an action “on an account” applies to an action to compel a distribution. [Leader v. Cords (2010) 182 Cal. App. 4th 1588, 1595-1597]. The Court of Appeal found that Probate Code section 17211(b) is a remedial statute and is intended to protect beneficiaries … [as] a means for the enforcement of a right or the redress of a wrong.” [Leader, supra at 1597]. The Court of Appeal specifically found that the failure by a Trustee to make a distribution to a beneficiary, and a Petition to compel such distribution, “…is a matter ‘relating to an account’ thereby falling within the remedies provided by Cal. Probate Code Section 17211(b).” [Leader, 182 Cal. App. 4th at 1598].
Accordingly, when a trustee misbehaves and refuses to distribute Trust assets, is sitting on the assets or treating them as his or her own, a beneficiary has the ability to seek Court intervention to correct the situation and seek attorney’s fees for doing so. When this happens, we recommend swift Court action. Often these matters resolve quickly once a Petition is filed. If the case settles whereby the Trustee concedes the dispute, everyone saves time and money. But swift action is called for in these situations. In litigation delay is almost never good. Beneficiaries do not want to wait until a Trustee has dissipated Trust assets altogether, as sometimes happens.
If you are confronted with a situation in which a Trustee is refusing to distribute assets or treating the assets as his or her own when such is not the case, you need prompt legal representation. Buffington Law Firm invites you to contact us for a Free Legal Consultation. All consultations are with an experienced California Living Trust litigation attorney, and are protected by the attorney-client privilege. Call us today!