Estate Litigation

There are times we are retained to compel somebody to do what they are obligated by law to do, but refuse. Sometimes it is to compel an accounting, or remove a trustee.  Other times it is over issues that are far more egregious and sinister.

Fiduciary Breach.   Anybody that is serving as a trustee, attorney-in-fact, caregiver, accountant, broker, etc. is serving as a fiduciary and is held to an elevated standard of conduct, the failure of which can trigger substantial damages.

Many forms of conduct permissible in a traditional arms-length transaction are forbidden to those bound by fiduciary ties. These individuals are held to something stricter than the morals of the marketplace.

“A person who is required to act for the benefit of another person on all matters within the scope of their relationship; one who owes to another the duties of good faith, trust, confidence and candor.  2.  One who must exercise a high standard of care in managing another’s money or property.” (Black’s Law Dictionary (8th ed. 2004) p.658, col 2.) 

In other words:

“…. A trustee is held to something stricter than the morals of the marketplace. Not honesty alone but the punctilio of an honor the most sensitive is then the standard of behavior. As to this, there has developed a tradition that is unbending and inveterate….”

-Benjamin N. Cardozo

(Meinhard v. Salmon, (1928) 249 N.Y. 458, 164 N.E. 545.)

The California Probate Code articulates numerous trustee duties, which apply to any fiduciary, some of which are identified below.

  • Duty of due care. “The trustee shall administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined by from the trust instrument.”  (§16040.)
  • Duty of loyalty. The trustee has a duty to administer the trust solely in the interest of the beneficiaries and may not obtain any advantage over a beneficiary by the slightest misrepresentation, concealment, threat, or adverse pressure of any kind.  (§ 16002.)
  • Duty to deal impartially. The trustee is bound to deal impartially with all beneficiaries of the trust and must remain neutral in a dispute between beneficiaries. (§16003.)
  • Duty to avoid conflicts of interest. the trustees may not under any circumstances have any personal dealings in the trust property for their own benefit. (§16004.)
  • Duty to preserve Trust property. Preserving trust assets is fundamental to the administration of the trust by the trustee.  (§16006.)
  • Duty to keep Trust property separate and identified. The trustee must never commingle trust property with any other property, including the trustee’s property. (§16009.)
  • Duty to account and Report.  The trustee has an ongoing duty to keep the beneficiaries reasonably informed and must provide a report to any beneficiary who requests it. (§16060-16063.)

Any perceived breach of any of the duties of a fiduciary that appear to serve the trustee, or favor one beneficiary at the expense of other beneficiaries, will be seen by the court as GREED and/or FAVORTISM.  This type of conduct never plays well to a judge or jury – especially when that beneficiary is the trustee (Self-dealing.)

Always keep an eye on anyone serving in a fiduciary capacity, with an even heightened sense of awareness when an elder is involved.

  • The Trustee of a trust;
  • The Executor (personal representative) of a will;
  • The attorney-in-fact under a power of attorney;
  • The spouse or caregiver;
  • Professional advisors, such as the lawyer, CPA, financial planner/advisor, insurance agent, or brokerage firm.

example:  

Your uncle passes away, leaving your aunt a widow.  At a local Elks event, she is introduced to an estate attorney, who offers to assist her with the administration of her late husband’s estate, which he does.  Thereafter, he updates your aunt’s estate plan and offers to keep the only original in his fire proof safe, so it doesn’t get lost.  She agrees.  Five years later, your aunt passes away, and the trust, proffered by the attorney, leaves your aunts residence and $400,000 of stock to a woman you’ve never heard of, only to find out later, that person was the attorney’s girlfriend.

If you have additional questions about estate planning or any other concerns related to the administration of a trust or estate, call our office in confidence today or fill out a contact form to set up a consultation.