Businessman running with butterfly net chasing money which is flying in the air. Finance business concept.

Trustees in California trust disputes should not overlook the power of the constructive trust remedy as a way to recover errant trust assets.  That’s a takeaway from Higgins v. Higgins (2017) 11 Cal.App.5th 648, an opinion in a trust litigation case published last week by the California Court of Appeal.

A Los Angeles Superior Court trial judge found a “clear moral obligation” on the part of Lupe Higgins to return several hundred thousand dollars to the Higgins Family Trust, but could not find a legal obligation, so the judge apologized to the Higgins family for being powerless to restore the funds.  The appellate court did not like the sound of that music and came to the rescue, ruling that the trial court had discretion to compel Lupe to transfer the money to the trustee of the Trust.

Magnifying GlassOne challenge that California trustees face is the prospect that confidential attorney-client communications will pass to successor trustees if they resign or are removed from office.  The attorney-client privilege belongs to the client, but the client is the office of the trustee, not the incumbent who holds that office.  Hence, the successor trustee generally gets to see the privileged communications of the predecessor, as the California Supreme Court explained in Moeller v. Superior Court (1997) 16 Cal.4th 1124.

A new opinion from the Court of Appeal, Fiduciary Trust International of California v. Klein (2017) 9 Cal.App.5th 1184, further shows the insecure nature of the attorney-client privilege in the context of California trust administration and may lead successor trustees to be more aggressive in seeking privileged communications of former trustees.

Pick meWhile financial elder abuse is a serious problem in California, not just anyone can sue to protect an abused elder.  This is especially true if the elder does not want to bring suit in the first place.  On April 19, 2017, the California Court of Appeal reinforced an important issue related to standing to bring financial elder abuse claims in the case of Tepper v. Wilkins (2017) __ Cal.App.5th __.  While an elder is still alive, only the elder or a qualified “personal representative” has standing to file suit for financial elder abuse.

New conservatorship cases in Sacramento County Superior Court have risen sharply over the past three years.  Judge Steven M. Gevercer, who presides in Department 129 (the Probate Division), presented startling numbers at a March 21, 2017 lunch of the Sacramento County Bar Association’s Probate and Estate Planning Section.  The panelists, including the judge and veteran court staff, spoke on “Issues Arising in Conservatorship Cases.”

According to Judge Gevercer, in Fiscal Year 2014 (ending June 30, 2014), there were 238 new conservatorship cases filed in Sacramento.  The number rose to 287 new filings in Fiscal Year 2015 and 333 in Fiscal Year 2016.  This amounts to a whopping 40 percent increase in conservatorship cases over the most recent three years.

On March 23, 2017, at the request of a certified question from the U.S. Ninth Circuit Court of Appeals, the California Supreme Court answered the age-old question – “what gives”?

That is to say, what gives – the impenetrable wall of a spendthrift trust or the ability of a bankruptcy trustee to tap trust funds for the benefit of the bankruptcy estate?  The answer is neither really, but our state Supreme Court did clarify the appropriate reach of creditors into trust-protected assets in light of what the Ninth Circuit observed as “opaque” statutory provisions in the California Probate Code.

Pro BonoIn a Prince-themed blog last spring, we used the singer’s untimely death to make the point that “you don’t have to be rich” to need an estate plan.  While the litigation surrounding Prince’s $100-300 million estate grinds on, as well covered in the Star Tribune, here in Sacramento there’s a new pro bono Estate Planning Clinic to help low income residents prepare estate plans.

FAQsIn our Sacramento trust and estate litigation practice there are several questions that come up over and over again.  In many instances, these questions are the building blocks of our practice that lead to more complicated questions that sometimes require the filing of a lawsuit to answer.  As a starting place, below are some of the more common questions we receive from trustees and from beneficiaries.

Yolo CourthouseMost California trust and estate litigation occurs in the probate department of the Superior Court, where the assigned judge manages and ultimately decides disputes.  Generally, there is no right to a jury trial so the outcome in contested cases rests with the judge, often supported by court staff who conduct file review and legal research.

The first quarter of 2017 brings changes in the assigned judges at the probate departments in Placer County Superior Court and Yolo County Superior Court, while there is continuity at Sacramento County Superior Court.

Diver Down FlagBeneficiaries beware: don’t dive in to trust litigation too quickly.  That lesson was learned the hard way, ironically, by a diving heiress in Williamson v. Brooks (2017) 7 Cal.App.5th 1294.  The California Court of Appeal decision, which related to a trust created by the founder of Kirby Morgan Dive Systems, Inc., addresses the question of how much information a trustee must give to a beneficiary, and what consequences may (or may not) befall a noncompliant trustee.

At home caregiver_1In a recent post, we discussed the hazards, from a tax reporting perspective, of erroneously treating California caregivers as independent contractors as opposed to employees.  If a caregiver is an employee (as is often the case), her employer also must comply with the various wage and hour rules that apply to the employment relationship.

Many elders and their families simply pay caregivers a straight hourly rate for 12 or 24 straight hours of work.  This approach, though convenient, may set the stage for employment litigation against the elder.  Below, we’ll discuss the two sets of rules that apply to California caregivers depending on the nature of their work – those who employ caregivers will need to pick the right set of rules and follow them.