Did you realize that when you are given a gift under a Trust it comes with a string attached? Not just a little string either, but a big, giant rope tied securely around it. That rope is your Trustee. It can be a lifeline, or it can be noose. It all depends on the Trustee.
Anytime someone creates a Trust to transfer assets to children and/or grandchildren, there are conditions attached. Why? Because the Trust terms must be followed. It is very different from just giving you something. If a parent hands you a $100 bill as a gift, there’s no middleman. You take the money; you go use it for whatever you want. It’s simple.
But when a parent gives you $100 under a Trust, it comes with a middleman standing between you and your gift. That’s the Trustee. The Trustee is the Trust manager. They not only have possession of your gift under the Trust, but they decide when you will receive it. They don’t decide on their own, however; instead, they are supposed to follow the directives laid out in the Trust document, as well as the duties and responsibilities imposed by the California Probate Code.
It’s a weird situation if you think about it. I’d be like your parent handing a $100 bill to their friend even though the $100 is meant for you. And then the friend hands you the $100 bill. Why not just pass the gift from parent to child directly? For one thing, that’s just how Trusts work. The alternative would be to pass the assets to children under a Will, which must go through the court-supervised probate process. So, Trusts are supposed to be easier because they do not require court supervision. And yet, they are not always as easy as they should be and that usually comes down to the named successor Trustee.
Benefits of Having a Trustee
Someone must oversee the Trust assets, so a Trustee is appointed. It’s no different from a probate estate where an Executor is appointed, except with Trusts the successor Trustee can take over without having to go to court. And a Trustee has immense power over the Trust assets because they alone have control of the property, and they alone must transfer them out of the Trust when required to do so.
What Happens When You Have a Bad Trustee?
Well, that means the string attached to your gift is a noose rather than a lifeline. Bad Trustees can cause substantial problems and damage to the Trust. What’s worse, no one is going to step in and stop your bad Trustee. You have the legal rights to act, but you must act. No one else is going to do that for you.
Beneficiaries often wonder why they must endure, or fight against, a bad Trustee. The main reason is because the Trustee was named by the Trust creator. Whoever appointed that person as Trustee made a bad choice. And now their bad choice has become your problem.
Beneficiaries also ask:
Is a Bad Trustee Required to Pay the Beneficiary’s Attorneys’ Fees Since it Was the Bad Trustee Who Caused all the Problems?
The answer is no. Surprising, we know, but true. In the American system of justice each side pays their owns fees regardless of who wins the case. There are a few narrow exceptions. But the exceptions to the general rule apply so rarely that you might as well face facts. If you want to stand up and fight for your rights, you’ll need to do so on your own dime. That’s just the harsh reality of the situation.
Can You Stop a Bad Trustee?
Of course you can. As a beneficiary of a Trust you have many rights. And every Trustee has a host of duties and responsibilities required of them. But you have to take action. Hire a lawyer, file your lawsuit, and go after that devil until the Trustee does what is required of him or her.
