Hire A Lawyer
If you have a Trustee who refuses to follow the Trust terms, you are headed to court. The only way to force a Trustee to act, to do the right thing, is to file a petition in probate court and ask the judge to issue orders that will force the Trustee to act. Probate court is the forum we use for issues relating to Trusts. Don’t confuse it with probating a Will, which is a different concept entirely. Both Trust issues and the probate of Wills takes place in Probate Court.
Many times people are perplexed as to why a Trustee would ignore the Trust terms. Maybe they refuse to create necessary sub-trusts, refuse to make distributions, or refuse to invest assets properly. This typically happens with individuals acting as Trustee who are not professionals because they don’t understand their fiduciary duties. Often it will be a Trustee who is also a sibling to the other beneficiaries. They might be lashing out or acting based on past ill will between the siblings. Or maybe there is no rhyme or reason to it. Whatever the cause, the result is the same—a big mess. The option to straighten out that mess is filing a legal action in court.
Decide What Remedy You Want
The Probate Court has a lot of power, but the court’s power is not unlimited. Probate Code section 16420 sets out the remedies the court can us to fix your Trust problem. Section 16420 allows the court to take the following actions to remedy a breach of Trust:
- Order the Trustee to take an action;
- Order the Trustee to refrain from taking an action;
- Compel the Trustee to pay money back to the Trust for any harms caused by a breach of Trust;
- Appoint a temporary Trustee or a receiver;
- Remove the Trustee;
- Set aside acts of the Trustee (with certain limitations on transactions with third-parties, which cannot be set aside);
- Reduce or deny compensation to the Trustee;
- Impose an equitable lien or constructive Trust on property, which allows such property to be transferred to the intended beneficiary;
- Trace Trust property that has been wrongfully disposed of and recover the property or its proceeds.
This is an impressive list of actions the court can take, but it is not exhaustive. There are a few things missing from the list. For example, no punitive damages. The court cannot award punitive damages against a Trustee who breaches their fiduciary duty. Also, no pain or suffering damages. In other words, the court can fix the problem brought about by a breach of Trust, but it cannot punish a Trustee for the act of breaching.
In any event, once you decide to file a legal action, you must decide what actions (meaning what remedies) you want from the court. Those remedies must be requested in your petition.
Gather As Much Relevant And Admissible Evidence As You Can Find
Once you file a petition in court, then you have access to something we call “subpoena power.” Subpoena power refers to all the devices under the Discovery Act that allow you to obtain documents and information from the Trustee and any third-party. For example, if the Trustee refuses to provide you with bank statements, you can issue a subpoena to the bank directly. This allows you to gather that information directly from the financial institution. The same applies to medical records, escrow documents for the sale of real property, property management records. Anything that you need to support your case.
You can also set depositions of relevant parties. That means the trustee can be deposed under oath by your attorney. You can also depose other witnesses who have knowledge of the Trust and its assets or transactions. The Discovery Act is a great tool for uncovering the evidence you will need to prove your case come time of trial. But discovery can also be complicated because you must follow the rules set out in the Discovery Act. Every type of discovery has its own procedure you must follow. And if someone refuses to comply, you must take the appropriate action to force them to comply. It all takes time, and time is money. Nevertheless,
