Trust Litigation Attorneys

When a trust becomes a dispute

A trust holding real property produces disputes at predictable moments: the settlor dies and the successor trustee takes over, a beneficiary asks a question that is not answered, or the trustee proposes to sell the property.

Four complaints come up most often. The trustee will not communicate or account for what they have done. The trustee is favoring one beneficiary over the others. The trust was changed shortly before death. Or property everyone assumed was in the trust turns out not to be.

The 120-day clock

Probate Code section 16061.7 requires the trustee to serve notification on beneficiaries and heirs when a revocable trust becomes irrevocable. Section 16061.8 requires a contest by the later of 120 days after service or 60 days after a copy of the trust terms is delivered during that 120-day period, whichever is later.

That period is the single most important deadline in this area and it is missed constantly, because the letter looks administrative and the family is dealing with a death.

If you have that letter and you have concerns, the service date governs everything that follows.

A trustee's duties over real property

To administer according to the trust instrument. To account to the beneficiaries. To deal impartially between beneficiaries with different interests. To avoid self-dealing. To keep trust property productive and properly insured.

Where the trust holds a house, those duties get specific quickly. Allowing one beneficiary to occupy it rent free while the trust pays the costs affects the others. Selling to a connected buyer without testing the market is self-dealing in substance whatever the paperwork says. Leaving a property uninsured or deteriorating is a failure to preserve it.

The unfunded trust

The most common trust problem in California is not a bad trustee. It is a trust that was properly drafted and never funded, so the house is still in the settlor's personal name and the trust does not control it.

It happens after a refinance where the lender required title out of the trust, after a later purchase taken in personal name, or because the deed was drafted and never recorded.

The remedy after death is a petition under Probate Code section 850. Before death it is a deed, which takes minutes. Checking the vesting on the current recorded deed is worth doing today.

Where trust matters are heard

Probate Code section 17005 generally looks to the trust's principal place of administration, with separate rules for testamentary trusts and other circumstances.

After the county is identified, the superior court's current assignment rules determine the courthouse and department.