Trust Litigation

Trust Litigation in California typically involves one or more of the following claims:

  • Breach of a trustee’s fiduciary duties owed to the trust beneficiaries;
  • Challenges to the trust on the grounds of undue influence, lack of mental capacity, mistake, fraud or elder abuse;
  • Beneficiaries’ entitlement to information, accountings and reports and asset valuation; and
  • Trust modification and revocation of trust provisions to conform to the trustor’s intent.

What Are The Duties Owed by The Trustee To The Beneficiaries Of The Trust And Who May Be held Liable For Breach of Fiduciary Duty?

The duties owed by the trustee to the beneficiaries under the trust will vary depending on if the trust is revocable, meaning can it be modified during the life of the creator of the trust, known as the "trustor". While the trustor is alive, the trustee generally owes fiduciary duties only to the trustor and not to the beneficiaries. After the trust becomes irrevocable (for example when the trustor dies or in the event the trust is irrevocable at the time it is created), the trustee then owes what is known as a "fiduciary duty" to the beneficiaries. Courts construe the trustee’s fiduciary duty standard of care to be very high, one of the highest required by law and requires the trustee to act with the utmost good faith in the best interests of the beneficiaries. See Judicial Council Of California Civil Jury Instruction 4100. The trustee’s fiduciary duties include, among other duties:

  • A duty to administer the trust according to the trust instrument (Prob. Code § 16000);
  • A duty to take reasonable steps to defend actions that may result in a loss to the trust (Prob. Code § 16011);
  • A duty to defend against any action that would diminish the funds to be distributed to the decedent's intended beneficiaries (See, Estate of Goulet, 10 Cal. 4th 1074, 1081–1082 (1995));
  • A duty to administer the trust solely in the interest of the beneficiaries (Prob. Code § 16002);
  • A duty to deal impartially with each and every beneficiary under the Trust in managing the assets of the Trust (Prob. Code § 16003);
  • A duty not to take part in any transaction in which the trustee has an interest adverse to the beneficiary (Prob. Code § 16004);
  • A duty to take reasonable steps under the circumstances to take and keep control of and to preserve the trust property (Prob. Code § 16006); and
  • A duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration. (Prob. Code § 16060).

The trustee’s violation of any duty owed to the beneficiaries of the trust constitutes a breach of trust. See, City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 68 Cal. App. 4th 445, 462 (1998). In addition to bringing an action against the trustee for breach of fiduciary duties, trust beneficiaries may also bring suit on their direct claims against third persons who have actively participated with a trustee in a breach of trust for their own financial advantage, whether by inducing, aiding or abetting the trustee's breach of duty, or by receiving trust property from the trustee in knowing breach of trust. See, City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 68 Cal. App. 4th at 467.

Trust Litigation?

Under California law, a trust is generally presumed to be valid and the trustor’s intent (as stated in the trust) is to be followed. If the trust is ambiguous or susceptible to more than one meaning, courts may consider evidence outside the plain meaning of the words used in the trust to determine the trustor’s intent.

Some challenges to a trust involve the issue whether the trustor had the mental capacity to understand, and to execute or sign the trust. Mental capacity depends on the type of document that is being signed, e.g., a will, or a trust, or a power of attorney, or a deed, or some other document, how complicated the document is, and the different, detailed facts of each different situation.

The starting point of capacity challenge to a trust begins with the basic presumption that everyone is capable of entering into a contract (including creating a trust), except for minors and persons of unsound mind. Civil Code § 1556. In California, the Probate Code specifies that people are presumed to be competent to make decisions and to be responsible for their acts or decisions. See, Prob. Code § 810(a); Estate of Arnold, 16 Cal. 2d 573, 587-588 (1940).

Under Prob. Code §§ 21350-56, certain transfers in trusts and wills may be presumed to be unlawful, such as certain transfers of assets to attorneys, caregivers, fiduciaries and other non-family members.

If there is a challenge to the validity of the trust, or if the trustee believes a particular gift or trust provision may be questioned by a beneficiary, the trustee may petition the probate court to determine the validity of the trust and or the proposed action by the trustee.

Where will the Trust Litigation Be Decided?

In California, claims against the trustee for breach of fiduciary duty and questions concerning the validity and interpretation of the trust will be decided in a branch of the Superior Court, known as the Probate Court.

If you are involved in trust litigation or believe a trustee is mistreating you, you need an experienced attorney to stand up for your rights.

Over 30 Years of Experience

Rated as a Top Lawyer in Civil Litigation by San Diego Magazine, attorney Jeffrey Lendrum, at the Lendrum Law Firm, fights to protect the rights of those involved in trust litigation.

Satisfied Trust Litigation Client

After suggestions, research and recommendations, Jeffery Lendrum was our pick for a family estate matter. Mr. Lendrum never disappointed me. He is very knowledgeable, patient, caring and above all worked with the highest of ethics. His ability to explain the finer points of the law and guide us thru the maze of the filings and petitions and eventual outcome was amazing even when he had to explain certain items more than once. His ability to write a succinct filing or petition is 2nd to none and this was so evident when compared to the other court documents submitted in our case. Jeff Lendrum, attorney at law, as a role model, is why young people want to become lawyers and if they all matured to practice law as he does, there would be no lawyer jokes.

Patricia- January 2018

Contact the Firm

Schedule a confidential consultation at the Lendrum Law Firm by calling 888-809-7832 or by completing a convenient email contact form.