Protecting Your Rights as a Beneficiary.
Trust litigation is often necessary in order to protect a beneficiaries’ rights under a trust. While the word litigation often inspires certain unfavorable reactions, this does not always have to be the case.
The definition of litigation is quite broad and can include many different aspects of beneficiary protection. In connection with trusts, litigation can be as simple as requiring the trustee to provide you with a copy of the trust or an accounting of the trust assets.
In order to get your matter before the court, you must have standing. Standing in trust litigation is defined by Probate Code Section 17200. Standing is a fancy legal term for saying that you are an interested party. An interested party pursuant to the probate code is subject to a very broad definition. To determine if you are an interested party, you should check with your counsel. However, an interested party includes beneficiaries and creditors of the trust.
Getting Your Matter Before the Court
Once you have determined that you have standing, you must have a plan to get your matter before the court. There are several different ways to obtain assistance from the court in protecting your rights as a beneficiary. As a beneficiary, or an interested party, you may ask the court to assist you by filing a Petition. A petition can be in one of many different forms depending on the assistance required.
You must ask quickly. You do not have an unlimited time within which to seek the court’s assistance on your behalf. Once the creator or settlor of the trust passes on and the trust becomes irrevocable, certain time limits become extremely important. The trustee has several responsibilities. The trustee is required to give all beneficiaries notice of their interest in the trust, an inventory and account of the trust assets, and an accounting of how those assets are used, spent, or divided. As soon as the trustee begins providing notice to the beneficiaries of the trust pursuant to Probate Code Section 16061.7, a beneficiary or interested party is required to seek the court’s assistance in challenging terms of the trust within 120 days.
Avoiding No Contest Clauses
If a beneficiary believes that there is something amiss with the trust or the provisions therein, they may choose to contest the trust. However, there are often times when one or more beneficiaries believes that the terms of the trust mean one thing and the trustee believes that the terms of the trust mean another. In that case, the beneficiary will want to file a petition for instruction with the court to have the court determine the meaning of the trust instrument. In order to avoid running afoul of a no-contest clause, the beneficiary can file a petition for declaratory relief with the court to get a decision in advance of filing a petition for instructions to determine that filing the petition for instructions is not a challenge to the trust or its terms, but is simply a request for clarification of its terms.
Finally, after a beneficiary or interested party has performed all of the work above, it is often the question…can I make someone else pay my attorney fees? The general answer that you will hear from your counsel is no. However there are many exceptions. When a trustee is not performing their job functions, i.e. honoring their fiduciary duties, it may be possible to surcharge the trustee for the costs and expenses incurred by the trust for the trustee’s malfeasance. Additionally, there may be opportunities for a single or a minority number of beneficiaries, who are integral in procuring and securing a fund for several beneficiaries, to seek assistance from the non-participating beneficiaries in paying for the attorney fees necessary to procure the common fund.
The bottom line is that trust litigation is not a scary process. It is a non-threatening and appropriate forum to secure your rights and benefits as a beneficiary. Locally, the probate court is a welcoming and inviting forum to ensure that your rights are protected. If you are the beneficiary or an interested party to a trust and have questions as to the administration thereof, call an experienced trust litigation attorney to ensure that your rights are being protected!
By Christopher C. Jones © June 2006