Can a California trustee require a beneficiary to sign a release in order to get a distribution from a trust?  A question like this appeared recently on the AVVO “Free Q&A” page and makes for a perfect blog topic.

Trustees understandably want to wrap up trust administration without having to worry about being sued by beneficiaries.  When a beneficiary appears to be litigious, the trustee may want to dangle a preliminary or final asset distribution as a carrot to get the beneficiary to sign a release.  Yet, since the trustee is a fiduciary, California law does not give a trustee unfettered discretion to insist on releases.  An effort to prevent trust litigation could end up sparking such litigation.

While institutional trustees may have once slept soundly considering themselves immune from class action lawsuits relating to the purchase or sale of securities on behalf of a trust, the Ninth Circuit’s recent ruling in Banks v. Northern Trust Corp. (9th Cir. 2019) 929 F.3d 1046, sounds a rousing wake up call for every trustee who professionally manages multiple trusts.

Federal law generally prohibits class actions relating to (1) misrepresentations of material fact in connection with the purchase or sale of a security, and (2) the alleged use of any manipulative device in connection with the purchase or sale of a security.  Thus, for the most part, cases involving these types of allegations can only be brought individually.  While institutional trustees have always had to be careful in what representations they make in the purchase or sale of securities, the potential for massive liability from class action litigation has largely been a non-issue.

However, the court in Banks v. Northern Trust Corp. clarified that this general rule does not apply to claims brought against a trustee by beneficiaries of an irrevocable trust.  Therefore, institutional trustees with a large volume of trust administration files, and especially those associated with an institution that provides investment products, should now be on high alert for the potential for class action claims to be brought against them.    

In “The Farewell,” now out in theaters, family members choose not to tell the matriarch (“Nai Nai”) of her terminal lung cancer diagnosis. They use the pretext of a wedding to get the family together in China so that they can spend time with Nai Nai one last time without actually saying goodbye. The well-meaning thought is that she will be happier and live longer if she thinks she’s healthy.

Written and directed by Lulu Wang, the critically-acclaimed film is promoted as being “based on an actual lie.” Wang explained a few years ago on the radio program This American Life that the story came from her own family’s experience.

In the movie version of the tale, Nai Nai’s granddaughter Billi (played by Awkwafina) who has grown up in the United States struggles with whether withholding the truth from Nai Nai is the right thing to do.

What if we import this story into the Golden State? Could Nai Nai, if a resident of California, be kept in the dark about her cancer diagnosis? 

This blog post views a trustee’s fee from the beneficiary’s perspective.  Under California law, a trustee generally can set his or her own fee and collect it without prior disclosure to the beneficiaries.  What can a beneficiary, who sees a hand reaching too greedily in the trust cookie jar, do in response?

We discussed best practices for a trustee when claiming a fee in a prior post and now consider how a beneficiary can monitor, evaluate and object to a trustee’s fee.

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.

Seniors are vulnerable to financial elder abuse and are often victimized, but there’s a scarcity of government resources in Sacramento County and elsewhere in California to address the problem.

On May 21, 2019, the Sacramento County Bar Association’s Probate and Estate Planning Law Section presented a program entitled “Helping the Helpless: How You Can Help Adult Protective Services and District Attorney Protect Vulnerable Sacramentans.” The speakers were Debra Larson and Irene Chu, managers with Sacramento County Adult Protective Services, and Frederick Gotha, Deputy District Attorney who heads the Sacramento DA’s Elder Abuse Unit.

Their presentations indicated that our community would benefit if local authorities had greater staffing to combat the rising tide of financial elder abuse.

No contest clauses are included in wills and trusts to discourage dissatisfied beneficiaries from challenging the document’s validity. Because enforcement of these clauses results in disinheritance, the California Probate Code limits their applicability. But what happens when a beneficiary defends a trust amendment that is found to be invalid? Can the defense of an…

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.

When a man dies in California, who gets the proceeds of his life insurance policy? The answer seems obvious: the named beneficiaries in the paperwork received and accepted by the life insurance company.

But what if the man gave the policy away during his lifetime? Can he cancel the gift and redirect the proceeds to others?  No, said the California Court of Appeal in Dudek v. Dudek (2019) 34 Cal.App.5th 154. Even though the life insurance company may not have recognized the gift, its recipient can recover the policy proceeds from those who received them.

What do you do if someone steals money or property from a trust or estate?  California Probate Code section 850 allows you to ask the Superior Court to order the thief to give the money or property back.  To discourage such theft, Probate Code section 859 provides that the wrongdoer “shall be liable for twice the value of the property recovered,” and may be liable for legal expenses incurred to recover the property, if you can prove the wrongdoer took the asset in bad faith, through undue influence, or through the commission of financial elder abuse.

Like many California statutes, the “twice the value” language of Probate Code section 859 is not crystal clear.  Thankfully, the Fourth District Court of Appeal in Conservatorship of Ribal (2019) 31 Cal.App.5th 519 recently provided guidance as to how to the calculation works.