Private Professional Fiduciaries

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In the absence of a trust that allows assets to pass without opening probate, the California probate process lasts for at least six months and can run much longer depending on the size of the estate and the nature of assets. The role of the personal representative (i.e., the “executor” if nominated in the will) is to administer the estate efficiently, resolve creditor claims, and get the assets out to the rightful beneficiaries.

By no means, of course, is the probate process supposed to drag out for two decades. That’s exactly what happened, however, in a case in Riverside County Superior Court. In Estate of Sapp (2019) 36 Cal.App.5th 86, the California Court of Appeal affirmed the probate court’s removal of the personal representative, providing guidance as to when a representative may be removed. As the opinion indicates, probate is no time for napping by the personal representative or the beneficiary: the former has a fiduciary duty to get the job done and the latter may need to poke the dozing, inept and/or corrupt representative.

A conservatorship, once ordered by a Superior Court judge in California, deprives a person of the right to control his or her financial affairs or person, or both.  When the judge appoints counsel for the proposed conservatee, what is the lawyer’s role?  Are the lawyer’s ordinary duties of loyalty and confidentiality diminished in the conservatorship setting?  Should they be?

These are vexing questions that have led to varying approaches in California’s 58 counties.  We sometimes represent siblings in contested conservatorship proceedings, typically in “parent custody” disputes when siblings are vying for control over Mom and/or Dad.  The approach taken by court appointed counsel is an important factor in how these cases move forward and it would be helpful to all concerned to have a more uniform approach.

Cooks in the Kitchen

Are six sibling co-trustees too many cooks in the kitchen? Many California trust disputes arise from disagreements among sibling co-trustees over how to administer Mom and Dad’s trust after the parents have passed. They all have a strong sense of what Mom and Dad wanted, but they don’t agree on what it was.  Thus, trust and estate litigators can be described as “sibling lawyers.”

A recent appellate opinion illustrates such co-trustee conflict and shows the unpredictability of our judicial process. In Trolan v. Trolan (2019) 31 Cal.App.5th 939, the California Court of Appeal addressed issues of trust interpretation and trustee removal in a situation where five siblings were aligned against the sixth.

What is a reasonable trustee’s fee in California for a family member who acts as trustee?  We see a high degree of conflict over this issue even when the amount of the claimed fee is small compared to value of the trust estate.  Our blog analytics show that our post of a few years ago on the fee issue continues to draw a high number of hits.  If you found this post in a Google search, you are probably grappling with a fee dispute in your family’s trust.

California Probate Code section 15681 generally permits a “reasonable” fee, but the term is hazy in practice.  Most California Superior Courts do not have fee guidelines in their local rules.  While California Rule of Court 7.776 lists factors a court may consider in reviewing trustee compensation, the trustee and the beneficiaries are likely to apply those factors differently.  Accordingly, fee disputes are common in California trust litigation.

Here we’ll discuss best practices for a trustee with respect to claiming a fee.  Let’s use the common situation where Mom and Dad have picked one of their several children to act as successor trustee when they die or become incapacitated.  When Larry becomes the trustee, siblings Moe and Curley may be resentful and thus disinclined to go along with any fee. 

Private professional fiduciaries in California are entitled to charge a reasonable fee for their services, but their fees for acting as conservators are subject to close court scrutiny.

A recent California Court of Appeal case, In re Conservatorship of Presha (2018) 26 Cal.App.5th 487, shows how closely probate judges and their staffs may examine the billing entries of conservators.  A conservator who cannot justify his or her time entries may leave the courthouse with an unwanted haircut.

The attorney-client privilege in California belongs to the office of trustee, not to the incumbent in that office, thus generally allowing successor trustees to obtain confidential communications that their predecessors had with counsel.  We blogged last year about an appellate opinion that reinforced this concept.

Last month, in Morgan v. Superior Court (2018) 23 Cal.App.5th 1026, the Court of Appeal found that a clause in a trust instrument expressly allowing a trustee to withhold attorney-client communications violates public policy and is unenforceable.  California estate planning attorneys take note: there is no way to draft around the rule that the attorney-client privilege stays with the office of trustee.

Stepmothers are frequent characters in California trust and estate litigation, as they are in fairy tales and Disney movies.  With about half of all marriages ending in divorce, there are many stepmother/stepchild relationships.  Mostly they work out fine, but some go south.

After blogging on sibling conflicts as a driver of trust and estate disputes, I offer thoughts today about the litigation I see between stepmothers and stepchildren.  In Family Feud parlance, my personal survey says that step-parent relationships are a close second to sibling relationships as the setting of trust and estate litigation.  I’ll focus on stepmothers here, though of course stepfathers also often clash with their stepchildren.

California trust and estate disputes may be avoided or resolved with the appointment of a private professional fiduciary to act in an oversight role with respect to an elder’s care and/or finances.  In a recent post, we suggested the use of professional fiduciaries or bank trust departments to resolve conflicts among family member co-trustees.

Here we’ll focus on professional fiduciaries as an option, drawing on our experience as trust and estate litigation attorneys.  We usually represent family members in conflicts.  Sometimes we represent professional fiduciaries.