When California residents create an estate plan, some of them make special arrangements for the assets they pass on in their wills. They create testamentary trusts, which do not kick in until death. Assets from the will go into the trust for the benefit of one or more beneficiaries and are managed and distributed by a trustee in accordance with the terms of the trust. Under these circumstances, trust litigation often arises when a trustee is accused of abusing the discretion given by the grantor or trust creator.
Trustees often have a substantial amount of freedom when it comes to managing the assets in a trust. They can buy assets for the trust, sell others and invest them as well. Some trustees also receive a significant amount of discretion when it comes to determining what serves the best interests of a beneficiary. In some cases, a grantor may limit that discretion by making the trust’s provisions as specific as possible, but not always.
Some grantors simply state that trust assets are to be used to for the care of a beneficiary, which could mean a multitude of things. Not all trustees are good at making these determinations. Moreover, a trustee may not be good at managing his or her own assets, let alone those earmarked to benefit someone else. Other trustees use trust assets a their own personal checkbook to the detriment of the beneficiaries.
Whether you are a beneficiary or a concerned party, if you notice that a testamentary trustee has stepped out of bounds, it may be worthwhile to find out for sure. If you are right, the next logical step would be to explore the legal options available to resolve the problem. Often, that means consulting with a California trust litigation attorney who can advise you of the beneficiary’s rights and offer guidance regarding the next steps.
Source: budgeting.thenest.com, “What Is the Power of a Trustee in a Testamentary Trust?”, Maggie Lourdes, Accessed on April 15, 2018