San Diego Estate Planning Lawyer Blog
A revocable living trust is a document appointing a trustee to assume custody of certain assets that you designate. You can serve as your own trustee during your lifetime. Upon your death, the successor trustee you name is then required to manage or dispose of the trust property as specified in the trust instrument.
San Diego Zoo Seeks Removal of Ineffective Trustee
Unfortunately, there are cases in which a trustee may fail to carry out the trust settlor’s instructions in a timely fashion. This, in turn, can lead to extended litigation. A recent case from here in San Diego presented such a scenario. This case is only an illustration and should not be construed as a complete statement of California law.
A husband and wife created a revocable living trust in 1985. When the husband passed away in 2003, the trust was divided into three sub-trusts. The wife retained the right to amend or revoke the trust while she remained alive.
She did so at least twice, executing an amendment in 2005 that designated a new successor trustee and altered the distribution of the trust’s assets upon her death. This new distribution included a number of charitable beneficiaries, including the San Diego Zoo. The wife died in 2007.
The successor trustee assumed control of the trust. But after five years elapsed without receiving its promised distribution, the zoo filed a petition with the probate court seeking to hold the trustee “accountable for breach of fiduciary duties owed to the zoo and other beneficiaries of the trust.” The zoo accused the trustee of not carrying out the wife’s instructions in a “timely manner” and of paying himself “excessive compensation” as trustee. The court ultimately removed the successor trustee and appointed a substitute.
Meanwhile, the wife’s sister and her son, who were also beneficiaries of the trust, filed their own probate petition, seeking to invalidate the trust amendment altogether. They accused the successor trustee, who was not related to the wife or her family, of “falsifying” the amendment. The zoo naturally opposed this petition, as invalidating the amendment would also eliminate its gift.
The probate court rejected this second petition, holding it was barred by the statute of limitations. The sister received notice of the trust amendment in 2008 yet did not file her petition until 2014. California sets a four-year statute of limitations in these types of cases.
The court further awarded attorney’s fees to the zoo, holding the sister and her son brought their petition “in bad faith.” The California Fourth District Court of Appeal affirmed the probate court’s decision. Not only did the sister wait too long to file her appeal, the appeals court said the award of attorney’s fees was within the “broad discretion” afforded to the probate court in trust proceedings.
Get Trust Advice From a San Diego Probate Lawyer
When creating a revocable living trust, it is important to select a successor trustee who you are confidant will carry out your wishes in a timely manner. After all, the point of a trust is to bypass the delays associated with traditional probate. It makes little sense to create a trust where the beneficiaries are unnecessarily kept waiting for years to receive their inheritance. If you need advice on trusts or any related matter from an experienced San Diego estate planning attorney, contact the Law Office of Scott C. Soady today.