What Is Trust Litigation in California? 2024

Hinojosa & Forer LLP

Trusts are an important part of estate planning for many Californians and, when created and managed competently and fairly, live up to their names. Well-managed trusts are a reliable tool for individuals to decide how their assets will be managed, whether during their lifetime or after their passing. A California trust lawyer is a professional who can step in to ensure that trusts are handled with precision and care, both in the planning process and in implementation.

What Is Trust Litigation in California?

Trust litigation refers to a lawsuit that is filed against the trustee by a beneficiary or by a trustee against a beneficiary. The lawsuit could also be filed by either a beneficiary or trustee against a third party. In essence, trust litigation is working in court with a trust that has been mismanaged in some way or is perceived as being mismanaged.

Trust Terms to be Familiar With

There are several terms which are useful in understanding trust litigation, including:

  • Trust Estate: Any and all property or assets that make up the trust (e.g., stocks, bonds, property, money, jewelry, etc.)
  • Settlor: The party who created the trust, also known as the trustor or grantor
  • Trustee: The party chosen to manage the trust estate and act on behalf of the trust
  • Beneficiary: A party who is entitled to some part of the trust estate
  • Probate: The court process of distributing the assets of someone who is deceased, often including the execution of a will; many people create trusts to avoid the complexities and potential fees of probate court

Reasons Behind Trust Litigation

Ideally, there would be no need for trust litigation. The trust would be clearly and fairly created by a settlor, most likely with the help of a trust lawyer, and the trustee would manage the trust estate in a way that beneficiaries agreed with. There are many reasons trust litigation exists, however.

If a beneficiary does not believe the trustee is managing the trust estate fairly, the need for a trust lawyer can quickly arise. Perhaps the trustee is being lax in their duties and not putting in effort to manage the trust. Sometimes, trustees abuse their power and manage funds or assets in a way that benefits them but does not treat beneficiaries fairly. Perhaps the trustee is misinterpreting the settlor’s intent and desires, whether accidentally or on purpose.

On the other hand, a trustee may find that one or more beneficiaries are making demands of them that conflict with the settlor’s wishes. They may be working with a co-trustee and witnessing a mismanagement of the trust estate.

A trustee may also find themself pulled into a trust litigation process by disgruntled beneficiaries who want a greater claim to the trust, regardless of whether the trustee has managed the trust estate fairly.

Additional Reasons for Trust Litigation

  • A trust has mistakes, is poorly written, or appears in any way to have been tampered with
  • There are doubts about the settlor’s capacities when writing the trust
  • The settlor appears to have had undue influence on them from another party
  • The trustee refuses to show the trust or provide financial information to other involved parties
  • The trustee is not fulfilling their fiduciary responsibilities

When Might You Need a California Trust Lawyer

Any time that you are faced with trust litigation, it can be a daunting and complicated business, particularly if the people involved are friends or family. The settlor of the trust usually creates a trust in hopes that their estate planning will simplify matters and lead to fewer complications. When trusts are mismanaged, unfair, or overly complicated, it can be helpful to have a competent trust lawyer step in, provide key information, look over financial records, and help find a solution that lines up with the settlor’s intentions.

FAQs

Q: What Is the Statute of Limitations on Trust Litigation in California?

A: The Statute of Limitations in California requires trust litigation to be filed within 120 days from the time you receive the Statutory Notification informing you about the trust. This is official documentation which should be sent to you by the trustee. If, however, you discover a breach of fiduciary duty on the part of the trustee, then you have up to three years to file a lawsuit against the trustee.

Q: What Is the Trust Law in California?

A: Trust law, including how to legally create a trust and trust validity, is laid out in the California Probate Code. It is important to note that any real property (land, home, etc.) is invalid as an oral trust. This code not only determines what counts as a trust but also outlines the roles of trustees, beneficiaries, and third parties. Given that laws can be complex, it is usually advisable to speak with an attorney if you have specific questions.

Q: Does a Trust Have to be Filed with the Court in California?

A: Trusts are not filed with the court in California. If you want a copy of a trust, get in touch with the trust attorney who prepared the trust, or try reaching out to the County Recorder. If you have requested a copy of a trust that you are named in from a trustee with no success, then trust litigation may be your wisest recourse. In this situation, it is advisable to hire a competent trust lawyer.

Q: How Long Does a Trustee Have to Settle a Trust in California?

A: The trustee’s first obligation is to fulfill the terms of the trust. There is no exact rule about how long it can take to administer a trust estate, but on average, it takes 12-18 months. A trustee must complete actions such as inventorying assets, reviewing trust investments, and understanding the trust. All of this can be complicated and time-consuming. If, however, you believe a trustee is not fulfilling their duty, it may be grounds for a trust litigation lawsuit.

California Trust Litigation Attorney

Trust litigation attorneys are equipped to handle a variety of situations and to advocate for individuals who find themselves trying to understand trusts, estate planning, or trust litigation. If you, or someone you know, need support in any one or more of these areas, please contact our team at Hinojosa & Forer LLP. We are here to support you and give you faith that a trust is being created and administered in the intended way.

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