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Trust litigation: The potential for an abuse of power

You may be among the California residents who have heard the phrase, "With great power comes great responsibility." This applies to many situations, including that of being a trustee. As a beneficiary, you may feel as though you are at the whim and will of a trustee. You may feel that something isn't right and may be considering trust litigation. Before you do, it may help to understand at least some of the powers given to a trustee that he or she may be abusing.

Some of a trustee's powers come from the trust itself while others are given by law. When it comes to the assets in a trust, a trustee generally has the power to collect, sell, buy and otherwise make decisions regarding them. A trustee is bound to protect the property in the trust, pay any required taxes and deal with claims against the trust. This may involve using alternative dispute resolution options or going to court.

Do you know your rights as a beneficiary of a family trust?

In order to pass on and protect a family's wealth, many will create an irrevocable family trust. If you find yourself to be a beneficiary of it, you may feel as though you are at the mercy of the trustee.

You need to know that you have rights as a beneficiary. If you feel as though something just isn't right, you could have a point. It may help to know what your rights as a beneficiary are and what steps you can take to rectify the situation.

Will the number of conservatorships rise in the future?

As baby boomers here in California and elsewhere reach retirement age, many of them also face the decline of their health. Many of them may need conservatorships to help care for them when they can no longer make decisions on their own. However, other family members may not agree with the actions of a conservator and may file litigation against the conservator to try to protect an elderly or otherwise ailing family member.

A conservator often has complete (or nearly complete) control over the course of a ward's life. Even if a person under a conservatorship achieves a full recovery, it can be a challenge to end the conservatorship. Family members, however, may have an easier time stopping the wrongs perpetrated by the person a California court trusted to protect an individual at his or her most vulnerable time.

Options when your loved one's mental health is failing

Perhaps you always thought of your parents as old. Their behavior, conversation and boring lifestyle made them seem like they were ancient compared to your fresh perspective. Now, of course, you realize that what seemed like evidence of old age when you were growing up was often just plain common sense.

Recently, however, you may have noticed that one or both of your parents are really showing their age. This is natural, of course, and you aren't really surprised when they have senior moments. However, you may wonder when you should be worried. What are the signs that your parents may need more consistent attention? When will you know if the time is right for taking over the management of your parents' needs?

Terms in Hugh Hefner's trust could lead to trust litigation

As many people here in California already know, Hugh Hefner died in 2017. As the family works through the details of his estate, certain terms in Hefner's trust document have come to light that could potentially lead to trust litigation. The trust prohibits any beneficiary from "frequently" using drugs or alcohol as a condition to remaining a beneficiary and receiving distributions.

Hefner's widow and four children are listed as beneficiaries in the trust. According to reports, the document provides trustees with the discretion to remove a beneficiary (and suspend his or her rights) if they reasonably believe that he or she has a problem with drug or alcohol use. The trust does provide for an exception if a medical doctor or psychiatrist prescribes a medication for regular use as part of a treatment program. 

What duties are required in conservatorships?

Many California residents need help taking care of themselves and their affairs due to some form of incapacity. If you agreed to act on behalf of a loved one who cannot do so for him or herself, you may consider going to court in order to establish a conservatorship. Before doing so, it may help to understand what duties are required in conservatorships.

Since you will be acting on behalf of the incapacitated person, also called the ward, one of the first duties may be to determine what assets the ward has. Once that information is gathered, you will need to determine what to do with those assets. Should you keep them, sell them or purchase other assets that would better serve the ward?

Do you think that trust litigation is your next step?

It probably made you feel good that your loved one took steps to ensure that you were provided for after he or she passed away. You know that you are entitled to distributions from the trust of which you were made a beneficiary. The problem is that you do not think that the trustee is acting responsibly, that he or she is mismanaging the assets of the trust or is somehow otherwise not fulfilling the duties to you outlined in the trust. It may be time to consider trust litigation in a California civil court.

You may have already attempted talking to the trustee to see if a peaceful resolution was possible, but it does not seem to have any effect. Perhaps the trustee told you that he or she holds the keys to the trust, and you cannot do anything about it. The first thing you need to know is that simply is not true.

Could a former addiction lead to trust litigation later?

The current "opioid crisis" going on here in the United States has caused many California residents to take the addiction of a family member into consideration during estate planning. Some residents are receiving advice that they should structure their estate plans in a way that limits an addict's access to an inheritance -- often using trusts. The problem with this is that many people beat their addictions, and the restrictions in a trust may no longer apply. Could trust litigation provide a beneficiary in this position with a way to unlock an inheritance?

Of course, an easy answer to this question does not exist. It usually depends on the circumstances. Since family members of someone with an addiction may not want to outright disinherit that person or provide just a small outright bequest to spend right away, many choose trusts. In order to limit the amount of control and objection a person with an addiction can exert.

What remedies could trust litigation provide?

Filing a lawsuit can be a daunting experience for California residents. For this reason, many people want to know what types of outcomes could happen. This applies to nearly every type of litigation, including trust litigation filed by beneficiaries.

California beneficiaries may be asking questions right now about their trusts. They suspect that the trustee may not be above board regarding carrying out his or her duties to them. The thought of suing the trustee may be growing, but before taking that step, they want to know what the results of the litigation could be beforehand.

Seeking the authority to help those who cannot help themselves

In some cases, there may come a time in life when an individual is no longer capable of making decisions for him- or herself. Whether it be a parent, or a close relative, you may wish to step in and assist with the necessary decisions, such as those pertaining to medical treatment and finances.

If your loved one didn't appoint a power of attorney, you may be uncertain how to obtain the legal right to make these decisions. The process can be complex, and it may be in your best interests to seek guidance on how best to approach the situation.

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