Beneficiary Litigation & Issues Specific to Will & Trust Contests
Beneficiary Litigation is not unusual. Beneficiaries, through no fault of their own, become routine victims of Fiduciaries (whether Executors, Trustees, or Conservators) who do not take their legal obligations as Fiduciaries seriously, or follow, their legal obligations as Fiduciaries. The “office” of a Fiduciary is governed by some of the strictest laws that absolutely demand strict guidelines that Fiduciaries MUST always act in the best interest of the Beneficiaries. Unfortunately some Fiduciaries don’t understand the legal obligations they must operate under. In fact many think were presented a blank check for their own enrichment, or to administer an estate however they like to the detriment of the beneficiaries.
Enforcing Beneficiaries Inheritance Rights – Keep Trustees Accountable.
Beneficiaries are sometimes taken advantage of and victimized by a Trustee who is not meeting the expectations or legal requirements of their Fiduciary duty. If you are a Beneficiary and your Trustee, Executor, or Conservator is not treating you well, is taking advantage of their position of power, enriching them-self from assets that are in trust for you, the beneficiary, the law is firmly on your side. The duty of a Fiduciary is an obligation of loyalty and good faith to someone that is the highest duty known to the law. Violation of a Fiduciaries’ responsibility is a BIG deal. Because we both defend and challenge fiduciaries in the course of our law practice we know that enforcing Beneficiaries Inheritance Rights is often necessary when fiduciaries are not living up to their legal duties. We have the legal experience to effectively and swiftly challenging fiduciaries and stand up for the rights of beneficiaries.
Beneficiary Litigation common to Wills
“Will Contests” are disputes over Wills which call into question the Will’s validity or the “accurate interpretation” of the Will’s terms. Wills are created by “Testators” who must be of legal age and “sound mind” for the Will to be valid. Even the simplest Will should, minimally, name a “personal representative” who will become the person who will manage the Testator’s Estate and specify beneficiaries to whom the Estates assets are to be distributed.
Different types of legitimate Wills valid in California include:
- Oral Wills
- Holographic (i.e. personally handwritten)
- Joint and Mutual Wills
- Conditional and Contingent Wills
- Statutory Wills
- Attested, Self-proved, or Notarial (Will witnessed by 2 or more people)
- Pour-Over Wills
While all of the above Wills are recognized in California, even if the validity a Will is established, other potential vulnerabilities usually surface. Few Testators remember (or follow through) to update their Wills or make “codicils,” amendments when “life changes” transpire. Codicils must be signed and dated in the presence of two witnesses.
Common problems associated with Wills:
- Lost, destroyed, lost, or multiple wills
- Codicils contradicting the original
- Provision for new a spouse or step-children
- Changing one’s “personal representative”
- Pre-nuptial agreements
Beneficiary Litigation common to Trusts
Many of the same problems which arise Will Contests are also common to Trusts. Whereas “Testators” choose a “personal representative” to administer an Estate having a Will, “Settlors” who create Trusts will appoint a “Trustee” who will have a “Fiduciary” duty to properly gather, document, manage and distribute the assets. The Trustee also has the legal responsibility to prudently invest the assets of the Trust with extreme care and always act in the BEST interests of the Settlor and Beneficiaries.
Common problems associated with Trusts:
- Trustee’s Fiduciary duty to Settlor and Beneficiaries
- Trustee’s commingling of Trust assets with personal funds
- Trustee’s failure to maintain proper accounts, disclose material facts
- Trustee’s influence on the amount of remaining net assets
- Trustee’s manner of distributing trust monies
- Trustee’s need for 3rd party help to remedy Beneficiary Disputes
Beneficiary Related Disputes – Examples of cases resulting in Beneficiary Litigation
So you understand the infinite possibilities – here are a few examples:
1- A Living Revocable Trust has two daughters named as Beneficiaries. One of the provisions of the Trust provides that “the medical needs of the daughters may be provided for.” One daughter wants to have a complete dental implant “makeover” which will deplete the trusts’ liquid assets by $32,000. The Trustee signaled his willingness to provide the money as the provisions state “the medical needs may be provided for,” and is interpreting “may” as giving the Trustee a ‘green light’ to make all decisions as he chooses. The sibling, the other daughter, strongly objects complaining that (1) the estate’s net worth will be drained, and (2) that dental implants are not a “medical need” but nothing more that a personal choice to squander trust funds on “cosmetics” and should not be allowed.
2 - The Trustee is contemplating investing $90,000 of Trust assets in the rehab of a vacation home located in Big Bear, California that is one of three separate properties in the trust. Moreover, the Trustee wants to hire his brother to do the extensive renovations and appliance upgrades with no contract as to how much goes to the brother’s labor and how much shall go to materials, appliances, etc. The Beneficiaries, 2 adult children, strenuously object claiming that (1), while the appliances are a bit “dated” in the vacation home, it IS “a rustic vacation home” and there is no need to upgrade the appliances, (2) nor is there any legitimate need to remodel the property in any way as the local Big Bear real estate broker who takes care of leasing the vacation home has expertly-maintained the property well over a decade, (3) the real estate broker also agrees that no makeover is necessary, nor would such a makeover result in the properties’ valuation rising to offset the expenditure, (4) that the Trustee has been and continues to create “make work” projects for his brother which are paid for by the Trust for the self-dealing and enrichment of the Trustee and his relatives, and (5) that the Trustee is not living up to the Fiduciary responsibility of “watching out” for best interests of the Beneficiaries.
3 - The Trust documents (set up by a retired physician) set forth that the Settlor’s daughter, the sole Beneficiary, will not realize control of the trust’s assets until she reaches 30-years of age. Until she reaches 30, a trusted CPA of the Settlor was named Trustee. The trust stated that the Settlor’s daughter shall have her college education expenses paid for so long as the trust has sufficient liquid funds in the bank account without the need to sell the primary real estate holding nor stock portfolio. The Beneficiary completed four years at the University of San Diego. The Trustee had approved and paid all tuition expense for the entire four years. The daughter, who seamlessly enrolled in Medical School immediately following her BS degree was surprised when informed that the Trustee will not approve additional tuition funding. When the Beneficiary contacted the Trustee, he explained that he considers anything more than a 4-year college degree a “wasteful and excessive” expense for the Trust. The Beneficiary looking at litigation, argues that (1) the Trustee knew all along that her entire university program was a “premed” undergraduate program, (2) that the Trustee and his employees of the accounting firm ALL understood that she was to follow her father into a career in medicine, (3) that the Trust has done very well and is flush with cash, (4) the trust was dramatically growing in value and that the Trustee had increased his fees every year in ratio with the value of the trust and that paying tuition would reduce his compensation, (5) that there has never been a need to sell her parent’s childhood home nor any stocks and (6) the now 75-year old Trustee has some “archaic personal opinions about women being doctors,” (7) Trustee is failing in his Fiduciary responsibility to properly administer a Trust, (8) the Trustee’s personal opinions and resultant actions do not align with her fathers’ written provisions set forth in the Trust and the Fiduciary’s duty, by statute, is to the benefit of both Settlor and Beneficiary. She is seeking to have the Trustee removed and replaced.
Trustee and Beneficiary Disputes can often be Resolved
Having an experienced Estate Attorney sit down with Trustees and Beneficiaries (independently and/or as a group) possibly airing out old family grievances and resentments, may go a long way toward resolving personal disputes before escalating emotions take the disputes unnecessarily into a courtroom for all the world to see. Securing skilled help to mediate estate disputes in a relaxed and informal setting might restore relationships and help bickering parties come to a resolution before circumstances devolve into a hostile and expensive courtroom battle. If no resolution can be negotiated, litigation may become necessary.
Protect Your Rights and Interests in Trustee and Beneficiary Disputes
Many people have no clue as to what their rights are when it comes to the administration of a loved one’s estate. In fact, many people never challenge a Trustee’s decisions. If you have any questions whatsoever regarding your rights as a Beneficiary, estate administration or trust administration, it is important to meet with a skilled attorney to learn about what options may be available to you. Vincent W. Davis and Associates have 60-years of combined experience to make available to clients in Southern California.
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At Vincent W. Davis & Associates, we are able to represent and assert the interests of our clients to protect their Beneficiary rights, and other estate-related issues. For assistance, please contact The Law Offices of Vincent W. Davis & Associates in Southern California for a complimentary consultation with Mr. Davis personally. Consultations are available in Los Angeles, Orange County, Inland Empire including Riverside or San Bernardino Counties. We also handle California Probate and Estate matters for out of state individuals.