*by Janet Brewer
Many times when a person is creating a will or a trust, s/he will nominate a child or other family member to act as executor or trustee. In theory, there is nothing wrong with doing this. However, in my many years of practice, I have seen problems arise after the death of the parent or other loved one because the trustee or executor is no longer getting along with the rest of the family. Communication has broken down, tensions have risen, and eventually the family is at war over the estate of their loved one.
Special duty of trust and responsiblity
A trustee or executor is a “fiduciary” of the estate and the beneficiaries of the will or trust. A fiduciary is someone who has a special duty of trust and responsibility to an individual or a group, such as the beneficiaries of a will or trust.
This means that the executor or trustee must always act with the best interests of the estate and beneficiaries in mind and must not intentionally engage in any act or make any decisions which could harm the estate or the beneficiaries.
Required: honest open communication
Moreover, the trustee or executor is required to act in accordance with the probate code and must communicate honestly and openly with the beneficiaries, gather all property of the estate, and prepare an accounting of all property that passes through the estate.
The benefits of a professional trustee or executor
Because of the unique and special duties of an executor or trustee, I usually advise my clients to consider naming a professional to act as executor or trustee rather than a child or other family member. This reduces the likelihood of drama and chaos if familial relationships breakdown after the client’s death. Although hiring a professional costs money, I believe it is a wise investment. After all, it’s better for the family to be united against the professional executor or trustee than to be at odds with one another.
Getting expert help
If you are currently planning your estate and are interested in naming a professional fiduciary to act as trustee or executor, consider your bank. For a fee, most banks are more than happy to provide such services to their customers. There are also a number of companies which specialize in acting as executor or trustee…. and in California you also have the option of naming a licensed “private professional fiduciary” – an individual who is licensed by the California Dept. of Consumer Affairs.
Compelling the executor or trustee to comply
As a beneficiary of a will or trust, if you find yourself in the position of dealing with a trustee or executor who refuses to communicate or is otherwise mishandling the estate, you are not at his or her mercy. You do have options. Whether your situation involves a misbehaving trustee or a misbehaving executor, you should consider filing a petition with the probate court to compel the executor or trustee to comply with the terms of the will or trust. If the court determines that the terms of the will or trust are not being carried out, it will enter an order requiring the trustee or executor to perform certain acts as set forth in the will or trust document within a specified time period. Failure of the trustee or executor to comply with the court’s order could result in his being held in contempt and may even necessitate his removal as trustee or executor.
If you suspect mismangement or worse
You may also want to file a petition for an accounting with the probate court. If the court finds in your favor, the trustee or executor must provide a detailed breakdown of all monies or other assets which have come into or gone out of the trust. Moreover, if you believe the trustee or executor has embezzled or mismanaged the money or other assets left by the decedent (the person who died and left the will or established the trust), you may also have a civil claim for “conversion”, which is similar to the criminal charge of theft.
In cases involving an irrevocable trust, California law requires the trustee to provide the beneficiaries with a copy of the trust document upon on the death of the settlor (the person who established the trust). If the trustee has failed to provide the beneficiaries with a copy of the trust document, they should consider filing a motion to compel its production with the probate court.
If the probate judge finds that the trustee has failed and refused to provide copies of the trust document to the beneficiaries, he will order the trustee to produce the trust document within a specified period of time. Failure of the trustee to comply with the court’s order could result in his being held in contempt or even removed as trustee.
Seeking removal of a trustee or executor
Another option for anyone who is dealing with a trustee or executor who is not properly handling the estate is to seek his or her removal. In some instances, the will or trust document may set forth reasons for the removal of the executor or trustee.
Additionally, the California probate code sets forth valid reasons for the removal of a trustee or executor. Appropriate reasons to remove a trustee include a breach of the trust by the trustee, the insolvency of the trustee, the unfitness of the trustee to administer the trust, a lack of cooperation among co-trustees that impairs the administration of the trust, the failure of the trustee to act, and excessive compensation to the trustee.
Under California law, an executor or administrator (the person who oversees the estate if the decedent did not leave a will) of an estate may be removed if he or she has embezzled, mismanaged, wasted the assets of the estate or committed fraud on the estate or is believed to be planning on doing so, is incapable of or otherwise unqualified to execute the duties of the position, has neglected the estate or failed to act, or if removal is necessary to protect the estate or the beneficiaries.
Moreover, an executor or administrator may be removed for any other reason authorized by law.
Seeking advice from an attorney
Dealing with these issues can be very stressful, complicated, and time consuming. Therefore, it is best to seek the advice of an experienced probate or estate planning attorney before filing any of the motions mentioned above. Look for an attorney who specializes in wills and trust, estate planning, and probate litigation rather than one who drafts the occasional simple will. If possible, seek out an attorney who is board certified in these areas of the law. You need an attorney who has extensive experience dealing with cases involving trustees and executors who may have mishandled the estate or otherwise breached their fiduciary duty.
When you meet with the attorney, you should have as much information as possible available so the attorney can properly evaluate your case. That information should include details about the acts or omissions you believe the executor or trustee has committed and the dates of those acts or omissions. You should be prepared to provide any supporting documentation that you can get your hands on, especially if you believe the executor or trustee has embezzled from the estate.
Your goal in seeking an accounting and/or removal of a trustee or executor is to ensure the wishes of your loved one are carried out. Many times, the trustee or executor simply doesn’t know what to do or may have made an honest mistake. Other times, the trustee or executor may be acting with their own interests in mind rather than those of the estate and beneficiaries.
Statute of limitations
Whatever the reasons behind the trustee or executor’s acts or omissions, it’s important that you act sooner rather than later if you suspect the estate is being mismanaged. If you do not act quickly, the courts may be unable to assist you. Remember, you only have a limited amount of time to bring certain court actions. This is known as the statute of limitations.
Moreover, if you know the estate is being mismanaged, but choose to do nothing about it for a number of years, your claim may be barred under the theory of laches. Laches means that you waited too long to take action and should not be rewarded for failing to make a claim in a more timely fashion.
Another reason to take action immediately if you believe an estate is being mismanaged is that you don’t want to assets of the estate to be exhausted by the trustee or executor. Waiting could mean that you get nothing. Even if you win a lawsuit against the trustee or executor and a judgment is entered in you favor, collecting on that judgment might take years and it’s quite possible, that you might never collect on it.
So, be proactive in protecting the estate and making sure that your loved one’s wishes are being carried out. Don’t be afraid to ask the executor or trustee for an accounting or for any other information regarding the estate that you are legally entitled to receive.
Being proactive may mean getting your own attorney
And remember, the attorney that drafted the will or trust is not your attorney, s/he’s the attorney for the settlor or decedent; so, s/he cannot represent you or give you any legal advice. You need your own attorney who will represent you and work to protect your interests.