The purpose of California estate planning is to prevent your children or other family members from fighting over your assets after you’re gone. But even the best intended plan can go awry. A recent California case demonstrates the problems that may arise when one child is charged with overseeing the distribution of an estate to another child.
This case is discussed here for informational purposes only and should not be construed as an authoritative statement of California law. The subject of the case is the estate of Lydia Wezel, who died in 2006. In 1991, Wizel established a trust as part of her estate plan. She intended her two children, Jill Wizel and Robert Brown, to benefit from the trust after her death. Lydia Wezel transferred her home into the trust and instructed her successor trustees to distribute the property to Jill Wizel. The balance of the trust estate, less a few gifts specified by Lydia Wizel, would be divided between Jill Wizel and Brown.
Upon Lydia Wizel’s death, the trust named Jill Wizel and Edward Ezor as co-successor trustees. Within a few months, questions arose regarding Jill Wizel’s competency to serve as trustee. According to court records, she was hospitalized for psychosis and had a history of drug, alcohol and gambling addiction. Ezor knew about Wizel’s problems but did not act to remove her as co-trustee. Instead, he took advantage of the situation, paid himself a $10,000 fee for his “services” as trustee without actually carrying out the trust’s instructions. Notably, he failed to properly divide and distribute the balance of the trust assets to Wizel and Brown.
When Is a Trustee Personally Liable?
Brown filed a petition with a California probate court in September 2008 demanding Ezor and Wizel’s removal as co-trustees. The court granted the petition, suspended Ezor, and named Brown as the new trustee in place of Wizel. Eventually, the court issued a judgment finding Ezor “had breached his duties as trustee” and ordered him to pay over $500,000 in damages to the trust. The court of appeals upheld the probate court’s decision.
Of note, the probate court found Ezor was personally liable for his maladministration of the trust. Under normal circumstances, a trustee is indemnified from personal liability. But in this case, the court of appeals said there was “substantial evidence” before the trial court that Ezor acted “unreasonably,” by not promptly distributing the trust assets as Lydia Wizel directed. Ezor’s delay caused the trust to incur additional expenses that, as the appeals court said, “should not have been charged to the beneficiaries” of the trust, namely Jill Wizel and Brown.
A case like this reiterates the importance of selecting the right people to serve as trustees or executors for your estate. It’s imperative you select competent, capable individuals who will carry out your instructions as written. And if you choose to name two or more fiduciaries, make sure you specify how any disagreements between them should be resolved or, if necessary, how either or both persons may be replaced.
Of course, you can’t plan for every possible contingency. But you should always work with a San Diego estate planning attorney who can advise you on how to avoid the obvious pitfalls. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.