Our Firm’s Trust litigation attorneys often deal with disputes concerning three key components of a California living trust. These are, specifically the trust provisions that determine: 1) who the beneficiaries of the Trust are and how each of them will take; 2) who the successor-trustees of the trust will be following the passing of the original Trustors, and 3) whether any portion of the trust, or the entire trust, becomes irrevocable upon the death of the first original trustor in a trust that was established by two trustors, e.g. husband and wife. These are fundamental elements of almost any trust. It is surprising how often trusts are disputed concerning these three elements. It is even more surprising how often inartful or circuitous and wordy drafting of a trust obscures one or more of these three key provisions of a trust
1. Beneficiary designations. We cannot overemphasize how important that it is for the trust to be clear about who the beneficiaries of a trust are, and how each of them will take their beneficial bequests. Simple, or well-drafted trusts will be clear and concise. A good trust will not obscure this within some wordy provision or other. It is maddening how often that it appears that an estate planning attorney seems to have delighted in burying the beneficiary provisions within a larger text of legal technicalities that most likely no one cares about or will ever read. Who the beneficiaries are, and what each one gets, is the most important provision probably in any trust writing. When this is in any way ambiguous it vastly increases the possibility of trust litigation i.e. a lawsuit.
Another trust drafting pitfall is where the trustors make a plethora of small special gifts. It is not uncommon for well-off trustors to make a myriad of special gifts. For example, some trusts will list many people who get gifts of say, $25,000 (called “special gifts” in the estate planning trade). At the time the trust is drafted, these special gifts may be a small portion of the trust estate, with the residual balance of the trust going to the trustors’ children. Unfortunately, designations such as this can lead to trouble. Often, while it may have been true at the time that the trustors sat down with the estate planning attorney that these gifts are a minor proportion of the trust estate, later in life this may not be so. Older people often burn through cash prodigiously late in life. Between medical bills and all those expensive vacations that the trustors may have been putting off, by the time the trustors are gone sometimes the special gifts approach, equal, or exceed the value of the trust estate. This usually means that the residual (main) beneficiaries take little or nothing. This is obviously not what the trustors intended, and very (very!) often the trustors never thought to amend their trust to balance the special gifts against their main bequest to their children. What could possibly go wrong? Lastly, when a trust contains a large number of special gift designations, many times no one still alive when the trustors have passed can figure out who these people are. Gifts to “Fred Flintstone, the trustors’ dear friend” may be completely ambiguous twenty or thirty years later, when the trustors have passed. Often no one remembers who these people are or were, and the successor-trustees now have a giant headache. These are but a few of the pitfalls that Buffington Law Firm’s trust litigation attorneys see on a regular basis.
2.Successor-Trustee designations. We cannot overemphasize how important it is for this provision to be clear, and to be the product of clear and thoughtful consideration. It is no exaggeration to say that a poor choice of the successor-trustee is one of the leading causes of trust litigation. Litigation constantly results from a poor choice of successor-trustee. Especially when combined with other inartful drafting of the trust instrument, this can lead to much heartache and headaches by the rest of the beneficiaries. Misbehaving successor-trustees are a frequent and constant cause of court action. Since living trusts are designed to function outside of the court system it is important that the successor-trustee be someone trustworthy. Too often successor-trustees become enamored with their role as such and try to take unfair advantage of their position. Trust disputes and trust litigation are often the very necessary result.
3. Irrevocability provisions. Whether the trust becomes irrevocable, and the provisions for this, are one of the more frequent causes of trust litigation. The classic (but not universal) plan for a trust is that when the first spouse passes, that deceased spouse’s portion of the trust becomes irrevocable, i.e. it cannot be amended by the surviving spouse. Although the funds are usually available for that spouse’s “health, education, maintenance, and support”, the purpose for such trusts is to prevent the surviving spouse from disinheriting the heirs of the deceased spouse. Buffington Law Firm’s trust litigation attorneys have handled trust litigation in many instances where it was quite evident that the trust was drafted in a convoluted way that concealed the fact that the surviving spouse could do just that: disinherit the deceased spouse’s heirs after his or her death. Our Firm believes that it is critical that all trusts clearly spell out the irrevocability provision and how it is supposed to work. We have litigated trusts that were downright deceptively, and yes, dishonestly drafted to obscure this, and to allow a surviving spouse to amend the entire trust to the disadvantage of the deceased trust’s heirs. The reader can imagine how critical this can be in the context of a family where husband and wife have different children from previous marriages, for example. To be fair, in some instances the trust was drafted so obscurely that it is quite unclear to a lay reader whether the surviving spouse can amend the deceased spouse’s bequests. Sometimes the surviving spouse does such an amendment wrongly believing that he or she has the power to amend the entire trust. This is an increasingly frequent cause of trust litigation.
If you are involved in a trust dispute, Buffington Law Firm’s Southern California trust litigation team invites you to contact us for a free legal consultation. All consultations are with an experienced trust litigation trial attorney, and are completely confidential and protected by the attorney-client privilege. And of course, there is never any obligation or charge. Call us today!