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California Trust Litigation: When Dealing with Unreasonable Beneficiaries

| Sep 21, 2022 | Firm News

Buffington Law Firm’s California Living Trust litigation team often deals with situations involving difficult or unreasonable trust beneficiaries.  Being trustee of a living trust, particularly once the trust becomes irrevocable, can be a difficult and thankless job that exposes the trustee to significant legal jeopardy.  Sometimes beneficiaries are suspicious of a trustee’s action and difficult to satisfy.  As is well-known, the trustee of a trust owes fiduciary duties to trust beneficiaries and it is sometimes not easy for trustees to know how to best avoid personal legal liability in this context.  Our Firm has represented many trustees who are confronted with litigious beneficiaries who are difficult to deal with.  Fortunately, under normal circumstances the law recognizes this and allows the trustee to be reimbursed his or her legal fees by the trust.  [See Leader v. Cords [182 Cal. App. 4th 1588, 1595-1596 (2010)] 

Skillful legal representation of a trustee is a must when there are trust beneficiaries who seem bent on making unreasonable demands of, or accusations against, a trustee. For example, a particularly powerful tool is a relatively recent statutory change providing for a Notice of Proposed Action. California Probate Code sections 16500-16504 permit a trustee to give notice to trust beneficiaries that the trustee intends to take (or not to take) some specified action.  After waiting at least 45 days, the trustee may proceed with the proposed action (or inaction) and will be free from any liability for proceeding in that fashion.  For example, a trustee may intend to sell a particular parcel of real property for a certain price.  There may be beneficiaries who disagree with the decision but who are unlikely to actually take action to stop it  After waiting the required 45 days, the trustee can move forward and list and then sell the property as specified in the NPA without fear of later being held liable to the trust or beneficiaries for selling the property on the terms specified. On the other hand,  if an objection is likely or certain, An NPA has relatively little value and the trustee may decide that it is more efficient and cost-effective to simply petition the court for instructions under California Probate Code section 17200 rather than wasting time with a Notice of Proposed Action. 

There are many other “tricks of the trade” that a trustee can apply to avoid personal liability to troublesome beneficiaries.  If you require such legal representation, Buffington Law Firm invites you to contact us for a Free Legal Consultation with one of our experienced trust litigation attorneys.  All such consultations are protected by the attorney-client privilege and are without any obligation to you.  Call us today!