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Costa Mesa Trust Litigation Blog

Testamentary trust litigation may come from abuse of discretion

When California residents create an estate plan, some of them make special arrangements for the assets they pass on in their wills. They create testamentary trusts, which do not kick in until death. Assets from the will go into the trust for the benefit of one or more beneficiaries and are managed and distributed by a trustee in accordance with the terms of the trust. Under these circumstances, trust litigation often arises when a trustee is accused of abusing the discretion given by the grantor or trust creator.

Trustees often have a substantial amount of freedom when it comes to managing the assets in a trust. They can buy assets for the trust, sell others and invest them as well. Some trustees also receive a significant amount of discretion when it comes to determining what serves the best interests of a beneficiary. In some cases, a grantor may limit that discretion by making the trust's provisions as specific as possible, but not always.

Roger Corman's sons file trust litigation regarding movie rights

Protecting assets is a primary goal of estate planning for many California residents. In many cases, this involves creating a trust to keep assets safe from a variety of scenarios, including the potentially inadvisable sale of one or more of the assets held by the trust. Such a sale is the subject of trust litigation filed against Roger Corman, a Hollywood director who is considered a legend in the industry.

Corman and his wife sold the rights to his catalog of movies, which totals approximately 270 films. Reportedly, Shout! Factory and Ace Film, the company that purchased them, intended to take advantage of merchandising opportunities and planned remakes for at least some of the movies. His two adult sons claim that those rights belong to an irrevocable trust of which they are both beneficiaries and co-trustees.

Who's watching over those appointed to conservatorships?

On occasion, California courts appoint individuals to step into important roles on the behalf of incapacitated individuals. The courts rely on these individuals to diligently and honestly carry out their duties to the conservatorships to which they are appointed. The problem is that not everyone appointed as a conservator takes his or her duties seriously and takes advantage of the conservatee.

For instance, a conservator in another state was recently sentenced to 25 years for embezzling over $1 million from the estates of more than one conservatee in two different counties. The estate of one of the victims recently entered into a settlement that will end litigation filed against the local government. Reports indicate that the suit settled for around $300,000 of the $800,000 taken by the conservator.

Challenging a conservatorship is possible

California law provides for one person to take over the decision-making role for another person when he or she needs protection -- often from him or herself. Well-meaning family members may believe that a loved one needs their intervention, but that may not be the case. In the alternative, someone may need protection from the person the court appointed to provide much-needed assistance.

It is important to know that it is possible to challenge the conservatorship or the appointment of a particular conservator. Not knowing your rights and where to begin could provide the most significant roadblock to doing so. Below are some answers to commonly asked questions regarding conservatorship problems.

Failure to following instructions could mean trust litigation

Just to see if his or her students pay attention and read the instructions, a California professor might play a trick on them. The instructions may have the usual language, such as read each question fully or write complete answers, but then, the instructions may also say to simply put your name at the top of the paper, date it and give it to the professor. Those who follow the instructions get a perfect grade, while not reading them costs others. Something similar could happen when a trustee fails to follow the instructions in a trust -- expect the outcome could be trust litigation and not just a bad grade.

As long as they are not illegal, trustees must carry out the instructions left by the trust's settlor (or grantor). Failure to do so could end up costing the trustee personally and harming the beneficiary or beneficiaries. For instance, a settlor may request that trust assets be used to pay for any outstanding debts of the estate prior to making any distributions. A trust may also put limitations on when distributions may be made or only under certain circumstances.

California courts rely on honesty in conservatorships

When loved ones can no longer handle their daily affairs on their own, it often becomes necessary for someone to take over the decision-making for them. California law allows conservatorships to be ordered by the courts, giving one person control over the other. The courts make these decisions as carefully as they can because of the amount of power given to the conservator. This means that the courts must rely on the honesty of that person, which may not be guaranteed.

For example, a court in another state gave a woman conservatorship over money intended for her two daughters. She was restricted from spending any of the money without the court's permission. It was later discovered that she embezzled hundreds of thousands of dollars from her own daughters. She lied to the court when obtaining permission to withdraw funds.

Trust litigation can be for more than breach of fiduciary duty

Many legal issues arise because one person fails to follow through with obligations he or she agreed to fulfill. This also applies to trust litigation filed by beneficiaries against trustees who they believe breached their fiduciary duties. Basically, a beneficiary is challenging the actions of the trustee. There are other reasons why challenging a California trust may be just as appropriate.

Perhaps you believe that another family member or potential beneficiary has unduly influenced the grantor (creator) of the trust from which you may benefit. However, just having such a belief will more than likely not be enough to challenge the provisions of the trust. Instead, you may need to gather the appropriate evidence that proves your assertions. This often involves proving that the grantor is vulnerable and that the other person stood to gain something by influencing the grantor.

Conditions in a trust could spark trust litigation

When conducting estate planning, many California residents decide that using more than a will to provide for family members after death would best suit their wishes and the needs of their loved ones. In some cases, they will use trusts to fulfill those requirements. The problem is that placing certain conditions on distributions could lead to trust litigation.

Trust creators, or grantors as they are called, can stipulate that a beneficiary meet certain requirements in order to receive distributions from the trust. For instance, a beneficiary may need to receive a college degree, to complete alcohol or drug rehabilitation or get a job. In the interim, the grantor could allow certain expenses to be paid on behalf of the beneficiary.

Did diminished capacity result in your disinheritance?

Well before your parent passed away, you knew something was wrong. Perhaps he or she began acting strangely, behaving unpredictably or making unusual financial decisions. You may have sensed there was some diminished cognitive ability or even substance abuse. Unfortunately, during this confusing time, your loved one executed his or her estate plan.

Now that your parent is gone, you discover that the estate plan did not leave you with the inheritance you expected. Perhaps the plan left you out altogether, and the wealth you anticipated went to someone else. This is beyond disappointment, especially if your parent's estate included the family business, heirlooms or other valuables you feel are rightfully yours. However, what recourse do you have?

Not all conservatorships are for the elderly or incapacitated

Many people here in California remember when performer Britney Spears had an apparent breakdown when she attacked a car with an umbrella after shaving her head. Since that incident in 2008, Spears' father has been in control of her life and finances. She is a prime example of the fact that people do not have to be incapacitated or elderly to benefit from conservatorships.

Now, however, Spears feels as though she has reached a place in her life where she can make her own decisions when it comes to her personal life. Reports indicate that her father no longer lives with her, and he has given her more freedoms over the years. She is said to have no objection to her father handling her money, however.

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