No Bad Faith Required – Trustee of Spendthrift Trust May Be Compelled to Pay Attorney Fees Under Family Code Section 2030

Gavel resting on top of money

Section 2030 of California’s Family Code provides an important safeguard to ensure the fairness of marriage dissolution proceedings. It allows the Court to order a more financially well-off party to pay some or all of the other party’s attorney fees, beginning as early as the start of the proceedings. Section 2030 was enacted to put divorcing parties on equal footing.

The protections of Section 2030 extend beyond spouses: where a third party has been joined to a dissolution proceeding, the statute allows the court to order that third party to pay the attorney fees of one of the spouses to the extent such fees were incurred in connection with the third party. This provision furthers California’s public policy in favor of egalitarian dissolution proceedings.

But what happens when that public policy collides with California trust law?  Specifically, what occurs when one spouse is a beneficiary of a “spendthrift trust” designed to keep assets away from the beneficiary’s creditors? The California Court of Appeal’s recent decision in In re Marriage of Wendt (2021) ___ Cal.App.5th ___, addressed this question.

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Britney Spears and “Marla Grayson” May Propel Tightened Oversight Over California Conservators

When a California probate court establishes a conservatorship, the conservator is charged with managing the conservatee’s person and/or estate in the conservatee’s best interests. The large majority of professional fiduciaries and family members who become conservators discharge their duties faithfully. Occasionally, however, a conservator may exploit the relationship for personal gain.

Over the past year, conservatorships increasingly have been in the spotlight. Perhaps responding to the hype, the California Legislature is considering legislation, Assembly Bill 1194, that aims to strengthen protections against abuse. In this blog post, we provide a summary of some key features of AB 1194 and how the bill, if enacted, may affect California conservatorships.

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Immortal Right — Income Beneficiary’s Entitlement to Accounting Continues After Death

Many California trusts confer a lifetime right to income on a person (often the surviving spouse) with the remainder passing to designated survivors upon the income beneficiary’s death.  When the income beneficiary dies, is it too late for the executor of the beneficiary’s estate to request an accounting for the purpose of evaluating whether the deceased beneficiary received all income to which he or she was entitled?

No, says the California Court of Appeal in Dunlap v. Mayer (2021) ___ Cal.App.5th ___.  A decedent’s successor in interest, such as an executor, can hold the trustee to account.  In addition to clarifying this point of law, the court held that a probate court cannot dismiss a petition at a case management conference when disputed factual issues require an evidentiary hearing, extending case law in this area.

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California Appellate Courts Doubly Divided Over Probate Code Section 859

We blogged recently about Keading v. Keading (2021) 60 Cal.App.5th 1115, which addresses whether a trial court can impose damages under California Probate Code section 859, without a finding of bad faith, if the court finds that a person has taken, concealed or disposed of property by committing elder or dependent adult financial abuse.

There is another split of appellate authority as to the interpretation of section 859.  Last year, the Court of Appeal, in Estate of Ashlock (2020) 45 Cal.App.5th 1066, held that a prevailing party is entitled to double damages under section 859, in addition to the recovery of wrongfully transferred property, resulting in an aggregate award of triple the amount taken.  The court disagreed with Conservatorship of Ribal (2019) 31 Cal.App.5th 519, blogged about here, in which the court limited the aggregate award to double the amount taken.

We thus have two substantial disagreements over the interpretation of Probate Code section 859, leaving California probate judges to navigate two forks in the road.

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“Mental Health Disorder” Must Be Proven Along with Delusion

When are delusions enough to invalidate an estate plan?  The California Court of Appeal addressed that issue earlier this month in Eyford v. Nord (2021) 62 Cal.App.5th 112.

The case involves a 90-year-old woman who favored a charity and disinherited the two grandchildren with whom she had been close.  The appellate court found that California Probate Code section 6100.5(a)(2) requires proof of a “mental health disorder” in addition to a delusion that caused the questioned testamentary disposition.  The opinion provides a guidepost for California lawyers who litigate contests arising from alleged delusions.

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When Can California Trustees Use Trust Funds to Hire Lawyers?

Many family member trustees are uncertain about whether and to what extent they can use trust assets to obtain legal representation.  For example, when two parents choose their daughter, upon their incapacity or death, to administer their trust as the successor trustee, the daughter may be unsure whether she can use trust money to hire a lawyer to help her deal with demands and complaints from her brother.

In this post, we’ll review basic principles of California law with respect to when a trustee can pay a lawyer at the trust’s expense.  Spoiler alert: it may be best to take the Buick and leave the Rolls at home.

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California Trusts Cannot Hold Title to Real Estate

A common misperception of trusts is that they are legal entities that, like corporations, can hold title to real estate and other property.  A new California appellate decision, Boshernitsan v. Bach (2021) 61 Cal.App.5th 883, addresses that misunderstanding.

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Is “Bad Faith” Needed for Double Damages Under Probate Code Section 859?

A recent decision from the California Court of Appeal shows a continued split of authority as to the meaning of California Probate Code section 859, which allows doubles damages for the wrongful taking of property under specified circumstances.

In Keading v. Keading (2021) 60 Cal.App.5th 1115, the Court of Appeal ruled that a trial court can impose double damages, without a finding of bad faith, if the court finds that a person has taken, concealed or disposed of property by committing elder or dependent adult financial abuse.  The Keading court disagreed with a recent decision of another Court of Appeal, leaving a conflict (akin to conflicting road signs) that may not be clarified until the Supreme Court or the Legislature wades into the fray. Continue Reading

Court May Compel Mediation of California Trust Disputes

(Editor’s Note: This post has been updated following the Court of Appeal’s opinion after rehearing.)

Trust and estate litigators, and mediators, are buzzing over a recent decision from the California Court of Appeal that validates mandatory mediation of trust disputes.

In Breslin v. Breslin (2021) ___ Cal.App.5th ___, the appellate court by a 2-1 majority held that a California probate judge may order the private mediation of trust disputes and then disallow the objections of any nonparticipating parties to a settlement agreement reached in mediation.

The upshot of the case, assuming the opinion becomes final, is that probate judges may be more inclined to require pre-trial mediation and parties will need to participate to avoid waiving their beneficial interests. Continue Reading

Judge Joginder Dhillon to Preside, by Zoom, in Sacramento County Probate Department

The probate unit of the Sacramento County Superior Court (Department 129) will have a new judge in February 2021.  Judge Joginder Dhillon will become the probate judge, replacing Judge Kevin R. Culhane who has served in that role since January 2020. Continue Reading