Not consenting or withdrawing consent, may adversely affect certain features and functions. In all these cases, no management is as bad as mismanagement, and courts tend to agree. One of the main exceptions to this rule is where a trust is invalidated through a trust contest. A trust contest is a legal challenge against the validity of a trust or its terms. Maybe they failed to take appropriate legal or financial action when trust assets were threatened in some way. The trusts creator is usually attempting to evade tax authorities, creditors, or even an ex-spouse to whom they owe alimony. Use an Expert Trust Litigator Suing a trustee of a trust can be a complicated and challenging process. Copyright 2023 Hess-Verdon, PLC. to remember that trustees have a fiduciary duty to act in their best interests at all times; if a trustee fails to do so, they are entitled to bring a claim against the trustee. At RMO, our initial consultation is free. Talk to an Estate Planning Attorney. What Is a Breach of Fiduciary Duty Lawsuit? A Los Angeles probate lawyer will generally be more familiar with the Los Angeles Superior Court Probate Division, versus an out of state attorney. Yes, a beneficiary can sue a trustee. A beneficiary can sue a trustee if they have legal Standing and can demonstrate that the trustee has breached their fiduciary duty, mismanaged trust assets, or failed to provide information or accountings. There was a problem with the submission. Ifdespite all of your efforts to stay on good terms with the trust beneficiariesa beneficiary's request doesn't match the instructions laid out in the trust document, you must override the beneficiary and follow the trust document. Assets that are supposed to be distributed through the trust are being held by the decedents estate, a family member of the decedent or a third party. So they tend to look unfavorably upon trustees who are abusing or otherwise failing to live up to the duties of their privileged position. There are signs of mismanagement that you should watch out for such as delays, inaccurate accounting, unclear answers to basic questions, and many others. The beneficiary is the person or entity who will ultimately receive the benefits from the trust. Many people never name a beneficiary for retirement accounts or life . Its worth noting that some trustees will try to delay and drag out legal proceedings in hopes of intimidating the challenging beneficiary with the threat of increased legal fees should the court order them paid by the losing party. Additionally, if all parties involved agree on removing and replacing the trustee, a formal court process may not be required. But in some situations, sharing the whole trust document with all the beneficiaries can trigger bad feelings. We win these cases all the time at RMO, because things like embezzlement, fraud, and commingling funds are sadly common. An heir is trying to cancel a beneficiary designation. Depending on the terms of the trust agreement, there may be provisions allowing for the removal and replacement of a trustee under specific circumstances. can also file a petition to have the trustee removed and surcharged. Trustee negligence occurs when a trustee fails to perform their fiduciary duties due to a lack of ability, attention or care. The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network. Beneficiary vs. Trustee: Estate Planning Guide - SmartAsset One of these could be due to a lack of transparency and inefficient asset management. During administration, you will be dealing either mostly or exclusively with the trustee, so you should familiarize yourself with the ways in which trustees can breach their duties. If it can be proven, for example, that the designated beneficiary committed fraud against the decedent in order to be named as the beneficiary of that asset, then the trust might be able to claim it for distribution. Yes, a trustee can override a beneficiary if the beneficiary requests something that is not permitted under the law or by the terms of the trust. Once a trust is irrevocable, a trust beneficiary can neither be added nor removed. You are entrusted with the responsibility of ensuring that the testator's wishes are carried out, and their At Hess-Verdon & Associates PLC, we pride ourselves on being the most dependable and sophisticated trust and probate litigation firm in California. Code 115.011 (a). You have a legal duty to give the beneficiaries information that they might need to protect their interests. The notice of proposed action gives the trustee a quick way to get consent from all the trust beneficiaries, and at the same time protecting them down the road from claims that they (1) didnt make disclosures to the beneficiaries, and (2) didnt get their consent prior to making a decision to sell the trust asset. The more transparency there is during a trust administration, the happier the beneficiaries should be. It's also common for children to be named both beneficiaries and executors of wills/trustees of family trusts. the inheritances they were left once the trust is settled. Trustee malfeasance is a broad term encompassing many different types of offenses, both intentional and unintentional. every day with their trustee disputes. But it also means you should not put one beneficiary above others, and you should never do anything that conflicts with the trust document. Having Your Home in a Trust is a Smart Financial Decision! The trusts creator is sometimes called a, First and foremost, the trustee has a duty of loyalty. You can start a court case involving trust property as you can any other property. Estate Planning. Are you looking for an estate litigation attorney in your area? Scroll downtosubscribe. A revocable trust is one that is in place while the grantor is still alive. A trustee is going to sell the trust asset, the primary trust asset, which is a family home that the parents lived in. Things to Consider. Can a Trustee Remove a Beneficiary from a Trust? | Lawrina The best way to relieve beneficiaries' concerns is to: You are required (by law) to keep beneficiaries reasonably informed about how trust assets are being managed. Yes. Most often, the loss and damages made by the trustee can be less apparent. Theres nothing better than that. If everyone named in the trust the trustee, and heirs unanimously agree to modify or terminate the trust, The trustee requesting for the court to modify or terminate the trust on account of its continuance defeating or impairing the spirit in which it was created if there is not unanimous consent. Fiduciary duty calls out to be transparent and gives updates to beneficiaries and heirs. Trustees have a legal right, called standing, to make decisions in lawsuits to determine, protect and oversee trust property interests. This means that they can take legal action against a beneficiary if it comes to light that the beneficiary may have engaged in misconduct that harmed the estate. Receiving updates? as to the nature of any relationship and the amount to be charged for the intended legal services. Under California Probate Code 16000, trustees must administer the trust according to the terms of the trust instrument. Even those with the power of appointment can only alter the distributions. Put simply, a breach of fiduciary duty occurs when the person who has been designated to act in the best interests of someone else fails to do so. A court may have the authority to order the trustee to remedy the contested action or compensate the trust for losses caused by the trustee's bad acts. Well also mail a copy of your demand letter to the trustee you are suing! But by then, the offer from the neighbor may be gone. If the trustees actions call for it, trust beneficiaries can also file a petition to have the trustee removed and surcharged. The court may order the trustee to take specific actions to correct their mistakes, such as repaying the trust for any losses incurred due to their actions or providing a detailed accounting of the trusts finances. If the problems with a trustee cannot be resolved, trust beneficiaries can consult with a trust lawyer to determine whether removal is a viable remedy. This can happen when the assets depreciate, there is no more purpose for the trust, or the trust becomes impractical. The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you. Can a Beneficiary Sue a Trustee? | Lawrina if the trustee has breached their fiduciary duties, committed misconduct or harmed the trust? Sometimes, a trustee can be removed without going to court. Defending a Trust Contest in California Understanding Trust Contests What is a Trust Contest? This means as trustee, you must always act in good faith and in the interest of the beneficiaries. Anyone can sue anyone. In a typical living trust, it is standard for grantors to designate themselves as the initial trustee and, . If you are a beneficiary of a trust and believe trust property to have been damaged, lost or misappropriated by another trust beneficiary, an heir, the trustee or a third party, you can bring a claim to try to recover the lost property and/or damages. A common example is when a trustee sells trust assets to themselves. Not naming a beneficiary at all. You are entitled to an accounting of the trust and the . If the grantor left a will instead of a trust, or died without a will or a trust, you may have rights as an estate beneficiary rather than as a trust beneficiary. ( Whittlesey v. So there are really two options here that are available to the trustee. It is important for trust beneficiaries to keep in mind that a trustee is a fiduciary, which means that it is the trustees job to always consider and act in the trust beneficiaries best interests. Contact Hess-Verdon & Associates today to discover how we can secure a results-driven outcome tailored to your needs and objectives. , beneficiaries can utilize the courts to try to compel the trustee to meet the requirements of their role. To win a breach of fiduciary duty case against the trustee, you must prove the following: It may be challenging to determine when a trustee is not fulfilling his/her obligations. For a free consultation, call, grantor, settlor, donor, trustor, or trustmaker, The Guide to Family Trust Embezzlement and Stealing, The Winners Guide to Family Trust Contests, The Trustees Guide to Breach of Trust Claims, The California Guide to Removing an Executor of Estate, The California Guide to Elder Financial Abuse. For example, while it would be preferable for trustees to communicate with trust beneficiaries before selling trust property, doing so is not generally a requirement for them unless the terms of a trust require it. If you are the beneficiary of a trust, you are on the right track if youre asking: What rights does a trust beneficiary have against a trustee? The technical storage or access that is used exclusively for anonymous statistical purposes. Trustees should be providing trust beneficiaries with regular trust accountings containing information about the trusts investments, trusts losses, trusts debts and assets coming into and leaving the trust. What Are Examples of Executor Misconduct? You may be doing everything right from a technical standpoint, but if the beneficiaries don't know what you're doingor why you're doing ityou're not likely to get their cooperation or support. The information provided on our website and in our videos are for general informational purposes only and does not, and is not intended to, constitute legal advice. Case Study: Disinherited Spouse Settles for Minimal Sum, Bad Trustee Case Study: Keystone Uncovers Trustee Misconduct, Misappropriation of Assets Case Study: Keystone Helps Surviving Spouse Recover Millions From Deceased Husbands Estate, The Probate Process: How it Works With and Without a Will, Equitable Adoption Case Study: A Stepchild Can Have Inheritance Rights. What to Consider! Finally, you should review (or have an . Reasons for an Estate Suing a Beneficiary Perhaps a beneficiary was stealing valuable objects from the decedent's home under the guise of caring for the decedent when they were ill. Consult with an experienced trust litigation attorney to determine your cases applicable statutes of limitations. If you are the beneficiary of a trust and believe the trustee to have failed in their duties in any of the ways mentioned above, it is important to get in touch with a beneficiary lawyer as soon as possible. Errors and/or unresolvable ambiguities have been found in the trust. The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network. The process involves establishing legal Standing, gathering evidence, and filing a lawsuit. However, there are more sinister happenings such as the trustee illegally unloading or moving assets because of greedy intentions. Can a trustee sue a beneficiary (the | Legal Advice Legal Question in Wills and Trusts in California Can a trustee sue a beneficiary (the adult child of the deceased) for back rent where there is no lease or action to evict or collect rent? Can the trustee evict a beneficiary even if the beneficiary has an Can a trustee sue a beneficiary (the | Legal Advice - LawGuru In more severe cases, the court may decide to remove the trustee and appoint a new one. Siblings contesting the trust? Trustee and daughters have been going through all of the grantor's personal property and taking what they want and discarding the rest. The answer is yes; suing the trustee if they have failed to competently do their job, have breached their fiduciary duties, or have caused harm to the trust through misconduct or negligence is one of your most important rights as a, and believe the trustee to have failed in their duties in any of the ways mentioned above, it is important to get in touch with a. as soon as possible. Most often, the loss and damages made by the trustee can be less apparent. Think of these requirements as the minimum you should do. Our founder, Scott E. Rahn has been named, Top 100 Trust and Estate Litigation by SuperLawyers, , Trusts and Estates Litigator of the Year, and Best Lawyers in America for Litigation Trusts and Estates. However, it is always recommended to consult with an attorney to ensure the proper procedures are followed. Yes. This basically means that the trustee must proactively work to preserve trust assets in any legal proceedings, whether that means suing someone who damaged the trust, or defending the trust against a bogus claim. Yes, if the trustees actions, such as breach of fiduciary duty or mismanagement of assets, cause losses in the trust, the court may hold the trustee personally liable and order them to repay the trust. Use the collected information as evidence to sue the trustee for mismanagement. In most states, if beneficiaries consent in writing to a proposed activity, they can't later sue you if the decision turns out to have been a mistake. This means that the trustee may not transfer their responsibilities or task someone else with performing the duties that the trusts creator specifically intended for them to carry out personally, and if they do they will still be responsible for their agents acts. If a trustee violates this fiduciary duty, the beneficiaries can pursue legal action to remove the trustee and, in some situations, sue a trustee for their wrongdoing. If the problems with a trustee cannot be resolved, trust beneficiaries can consult with a trust lawyer to determine whether removal is a viable remedy. In cases where the trust is deemed illegitimate altogether, due to the circumstances precipitating its formation, the trust may simply be terminated. As the worlds first robot lawyer, weve helped thousands of users sue anyone, from their next-door neighbors to big corporations such as: We have helped over 300,000 people with their problems. Here are some tips. Stay up to date withthe latest newsin the exciting world of probate law through our quarterly newsletter,The Keystone Quarterly. However, this is not always the case, the beneficiary can always be removed if it is a revocable trust. If the beneficiaries all live nearby, a good way to start might be to call a family meeting and sit down together to go over the process of trust administration. This can be a difficult position because, as the trustee, it's your job to be fair to everyone and never to benefit yourself at another beneficiary's expense. Beneficiaries Rights to Trust Information. Beneficiaries may have grounds for a lawsuit if a trustees actions lead to significant losses or damage to the trusts assets. Trustees have many duties under the law, and failing to live up to any of them may provide grounds for a beneficiary to file a lawsuit. The Trustee will then, more than likely, have to go to court to get a court order. Can an Executor Override a Beneficiary? | Keystone Law Group A person with an interest in the estate is trying to cancel a gift the decedent gave to the trustee. The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes. Here, the general rule is that if a beneficiary or potential beneficiary is contesting the validity of the entire trustmeaning that, if successful, the trust will cease to existthen the trustee has the authority and likely a duty to defend the trust's existence, even if they are ultimately unsuccessful.