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Trust Litigation

What are grounds for contesting a living trust?

Does a trustee have a duty to provide a beneficiary with an accounting of the trust?

When is a trustee liable for a breach of trust?

What are the potential remedies if the trustee commits a breach of trust?





Q: What are grounds for contesting a living trust?

The 3 most common grounds are: (1) Lack of Capacity; (2) Undue Influence; and (3) Fraud:

Lack of Capacity: In order to establish a valid trust, the trustmaker must have sufficient mental capacity to understand the consequences and gravity of creating a trust, understand the nature and situation of his or her property, and understand his or her relations to living descendants, spouse and others whose interests are affected by the trust. A trust may also be attacked if the trustmaker suffers from a mental disorder with symptoms of delusions and/or hallucinations that cause the trustmaker to devise property in a way he or she would not have done without the disorder. A trustmaker is presumed competent and the contestant has the burden of proving the trustmaker lacked capacity at the time the trust was signed.

Undue Influence: Undue influence is conduct that subjugates the trustmaker's will to that of a third party, causing a different disposition of trust property than would have occurred had he or she been permitted to follow his or her own desires. Undue influence is established when it is shown that a trust distribution was brought about by undue pressure, argument or other coercive acts that caused the trustmaker to lack the freedom to follow his or her own wishes. Undue influence can be inferred from trust distributions that are different from the trustmaker's stated intentions during life, from the close relationship between trustmaker and the third party, and/or from the third party's participation in preparing and executing the trust.

Fraud: Similar to undue influence, fraud involves a trustmaker who was acting with his or her own free will but who was deceived by a third party into doing what he or she would not have done without the fraud.  It must be proven that the trustmaker held the mistaken belief induced by the fraud at the time the trust was executed.


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Q: Does a trustee have a duty to provide a beneficiary with an accounting of the trust?

It depends on whether the trust is revocable or irrevocable.  If the trust is revocable, the trustee does not have a statutory duty to provide an accounting to beneficiaries other than the person(s) with the power to revoke the trust.  When a revocable trust becomes irrevocable, the trustee has a duty to provide an accounting to current beneficiaries at least annually unless the duty is waived by the beneficiaries or to the extent the trust instrument waives the necessity of an accounting.  However, the trustee has a statutory duty to keep the beneficiaries reasonably informed of the trust and its administration which is arguably broader than the duty to provide an accounting.  


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Q: When is a trustee liable for a breach of trust?

The trustee of a trust has a duty to comply with the terms of the trust.  Failure to comply with the terms of the trust is considered a breach of trust.  The trustee also has fiduciary duties that he or she must comply with.  For example, the trustee has a duty to avoid conflicts of interest and self dealing, a duty to keep trust assets separate from his or her own, and a duty of disclosure, among others.  The Prudent Trustee Rule requires the trustee to perform his or her duties in good faith and with reasonable prudence, discretion and intelligence.  The Prudent Investor Rule requires the trustee to manage trust assets with reasonable care, skill and caution.  If the trustee fails to comply with the duties imposed statutorily or by the terms of the trust, he or she may be liable.  However, the terms of the trust may operate to limit the trustee's liability as long as he or she acted in good faith.


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Q: What are the potential remedies if the trustee commits a breach of trust?

If a trustee commits a breach of trust, the beneficiary(ies) may sue the trustee:

(1) To stop the trustee from breaching the trust;

(2) To compel the trustee to provide compensation for the breach;

(3) To remove the trustee and/or appoint a temporary trustee;

(4) To set aside bad acts of the trustee;

(5) Reduce or deny the trustee's compensation;

(6) Put a lien or constructive trust upon certain affected trust property;

(7) Recover trust property that has been wrongfully transferred.

This list is not exhaustive and depending on the particular circumstances, there may be other possible remedies as well.


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Hinshaw Estate Planning is a practice group of Hinshaw, Marsh, Still & Hinshaw and assists clients in matters related to Estate Planning, Asset Protection, Planning for Children, Inheritance Protection, and Estate & Trust Litigation in the areas of Saratoga, San Jose, Los Gatos, Monte Sereno, Campbell, Santa Clara, Sunnyvale, Cupertino, Los Altos, Los Altos Hills, Mountain View, and Palo Alto within Santa Clara County, the areas of Menlo Park, Woodside, Atherton, Portola Valley, San Carlos, and Redwood City within San Mateo County, and the Greater San Francisco Bay Area.



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