By: Roger J. Buffington, Esq.
In California Trust litigation one of the most common issues that Buffington Law Firm’s trust litigation attorneys deal with involves the potential removal of a trustee or successor-trustee of a trust. Normally, the trustor (the original trustmaker or trustmakers) designates in the trust writing who will be the successor-trustee after the trustor can no longer act as such by reason of illness or death. The law imposes virtually no restraints or qualification requirements on this selection. The successor-trustee of a California living trust typically assumes control of a considerable amount of property. Many California trusts are valued over $1 million, and often much more. It is not uncommon for the successor-trustee of a trust to suddenly be responsible for millions of dollars of wealth that belongs to others, i.e. the trust beneficiaries, for the first time in his or her life. Not uncommonly, the successor-trustee has no financial or fiduciary training. In such circumstances a successor-trustee is well advised to retain legal counsel, as the law allows. Many do not, for whatever reason, or delay in doing so. What could possibly go wrong? Obviously, a great deal. It is very common in California trust disputes for the beneficiaries of a trust to find fault with the way that the successor-trustee administers the trust, the decisions that he or she makes, and so forth. Often the beneficiaries initiate court action by bringing a trust petition alleging breach of fiduciary duty. The issue of misbehaving trustees is a recurring problem in California trust litigation.
Even a well-intentioned successor-trustee can easily make mistakes that constitute a technical breach of trust. One of the most common errors that successor-trustees make is to put trust assets, such as cash, in a non-trust bank or brokerage account. Sometimes a trustee will sell some trust asset or other, such as a car, and deposit the funds in a non-trust bank account, for example. The law as well as good practice requires that the subject bank account be titled in the name of the trust. It is not uncommon for successor-trustees to fail to title the account correctly. This is a technical breach of trust, since trustees are required to safeguard trust property and segregate trust funds. Another common issue can arise as to whether a given asset is or is not actually a trust asset. This issue comes up often in the case of a spouse who has a trust separate from the estate of the other spouse. It may not be clear whether a given property item is a trust asset. Sometimes the trustee truly is acting with wrongful intent and effect. Sometimes successor-trustees engage in improper self-dealing, try to manipulate the trust for their own benefit, and the like.
In such circumstances the question is how to deal with the trust dispute. Often there is longstanding bad blood between the petitioning beneficiaries and the successor-trustee, who is now a respondent (defendant) in a trust petition, which is a form of lawsuit. Invariably the beneficiaries want quick, violent legal action to remove the successor-trustee. Sometimes this is justified.
Most courts are resistant to removing a successor-trustee early in the lawsuit absent pretty compelling reasons for doing so. This inclination is supported by California law. California law gives considerable deference to the choice of successor-trustee that the trustor has made. California case law has repeatedly held, as in Trolan v. Trolan, that “t]he trial court’s power to remove trustees “is a power that the court should not lightly exercise, and whether or not such action should be taken … rests largely in the discretion of the trial court. Furthermore, the court will not ordinarily remove a trustee appointed by the creator of the trust.” [Trolan v. Trolan (2019) 31 Cal. App. 5th 939, 957(citing to Estate of Bixby (1961) 55 Cal.2d 819, 826)]. Buffington Law Firm’s trust litigation attorneys have litigated many lawsuits that deal with this issue over decades. It is clear that a trial court should exercise great care in suspending or removing a successor-trustee. Most trial courts do. Innocent and non-harmful mistakes by trustees, even where such constitutes a technical breach of trust, normally should not merit removal, especially where the trustee corrects the error and moves on to administer the trust properly. On the other hand, some trustee misbehavior absolutely merits removal. Buffington Law Firm’s trust litigation lawyers have dealt with many cases on both ends of this spectrum. We have effected the removal or suspension of many trustees. Other times we have successfully defended trustees who were acting properly but who may have committed some technical breach of trust that, when identified, was readily remediated. Just as often we have brought suit against a misbehaving trustee and as a result of this, the trustee quickly began administering the trust correctly once he or she understood that the Court was scrutinizing the trustee’s actions. In such cases the Firm is often able to achieve relief quickly, efficiently, and at low cost.
If you are involved in a trust dispute or are contemplating trust litigation, Buffington Law Firm’s trust litigation team invites you to contact us for a free legal consultation. All consultations are with an experienced trust litigation trial attorney, are confidential and protected by the attorney-client privilege, and there is never any obligation.