A trust is a legal instrument used to convey assets from the creator of the trust (the “trustor” or “settlor”) to one or more beneficiaries. There are many reasons to establish a trust. A common trust in California is a revocable trust established to convey assets to heirs upon the settlor’s death and thereby avoid the probate court process. Other trusts manage assets on behalf of beneficiaries.
Because trusts are often used to convey wealth from one generation of a family to the next, many inheritance disputes involve trusts and lead to lawsuits. Typical trust litigation will revolve around the belief that the trust document has been inappropriately changed to benefit one beneficiary at the expense of others. Sometimes there is evidence that the person who created the trust was unduly pressured into creating or altering the trust or was not mentally competent when they last signed the trust instrument. In another type of trust dispute, a lawsuit challenges how a trustee, a person or entity given authority over the assets of a trust, is administering the trust.
If you suspect undue influence or some other type of fraud in the creation, revision, or administration of a trust, you may be able to contest the trust in a California court and have proper administration of the trust and its assets restored. The attorneys at Albertson & Davidson, LLP can help you work through a dispute involving a contested trust, just as we have for many other individuals and families in California. Through negotiations and litigation experience in courtrooms throughout California, Albertson & Davidson has recovered more than $130 million in settlements and court verdicts for our clients.
Trust Lawsuits in California: An Overview
A trust is established to benefit a person or entity, such as a charity or school. The grantor puts assets into the trust (i.e., cash, real estate, stocks, bonds, mutual funds, etc.) and appoints one or more trustees to administer the trust for the benefit of its beneficiaries. Administering the trust typically involves investing its assets to increase the wealth of the trust and distributing the trust’s assets according to the trust’s bylaws.
Trusts are often established to distribute assets upon the grantor’s death to beneficiaries who are younger family members, such as children. If beneficiaries are underage at the grantor’s death, trust bylaws may grant them a portion of their inheritance – paid as a regular allowance, perhaps – and then their remaining inheritance when they turn 18 or 21, complete college, get married, etc.
Trust issues occur when a beneficiary does not receive what they believe they were promised at the appointed time. When questions and concerns directed to the trustee(s) go unresolved, the only recourse is to ask the courts to step in and resolve the dispute.
Most Common Types of Trust Disputes in California
The usual purpose of a trust lawsuit is to ask the court to restore a beneficiary’s rightful inheritance. Trust litigation may also involve asking the court to determine whether a trustee’s administration of the trust has been lawful. Finally, a lawsuit against a trustee or third party might seek to recover property that is believed to rightfully belong to the trust.
The types of allegations of wrongdoing we typically see in a trust lawsuit include:
- Fraudulent administration of the trust. There are numerous nefarious practices by a trustee that could amount to fraud, including:
- Embezzlement
- Squandering or mismanagement of assets
- Commingling – mixing personal assets with estate property
- Failure to account for activities of the trust
- Breaching bylaws of the trust
- Breach of fiduciary duties
- Undue influence on the creation or alteration of the trust, such as due to coercion of the settlor or by a new “companion” or other advantage taken over a vulnerable trust benefactor
- Lack of capacity or competence of the trust’s settlor, such as due to dementia or other illness or infirmity
- Violation of the terms and/or purpose of the trust by the trustee(s)
- Issues with the creation of the trust, such as lack of requisite formalities, unlawful purpose, a purpose contrary to public policy, or violation of rules against perpetuities
Remedies When Contesting a Trust in California
Successfully challenging a trust in California requires filing a petition with the local probate court that clearly outlines the reasons for the challenge. The lawsuit must also provide supporting evidence and any relevant information regarding beneficiaries or trustees involved in the dispute.
A lawsuit might ask the court to:
- Compel the trustee to provide a copy of the trust and/or other financial information
- Instruct the trustee to account
- Instruct the trustee to perform certain act(s)
- Prevent the trustee from taking an action that would breach the trust
- Set aside past actions of the trustee (subject to certain limitations)
- Remove the trustee and appoint a successor trustee
- Reduce or deny compensation to the trustee
- Order the trustee to pay damages or restore property to the trust
- Trace trust assets wrongfully disposed of and recover them or their proceeds
- Appoint a special fiduciary to take possession of trust assets and administer the trust
- Rule the trust invalid and vacate the trust
Contact an Experienced California Trust Beneficiary Attorney
California’s laws governing trusts are complicated, but a trust beneficiary has rights that an experienced trust litigation attorney can protect. At Albertson & Davidson, LLP, we have successfully litigated against and defended California trusts and trustees, so we understand litigating these complex cases from either side. We know when a trustee is not living up to their legal duties or a trust is flawed, and we have the legal know-how and dedication necessary to stand up for the rights of abused trust beneficiaries.
Since our firm’s founding in 2008, we have recovered more than $130 million through trust and estate litigation on behalf of our deserving clients. Let us protect your inheritance. We maintain offices in Los Angeles, Bay Area, Orange County, and Silicon Valley to serve clients throughout California. We stand. We fight. We win. Contact us today at (877) 632-1738 or online for a free and confidential consultation.
