Most people choose to utilize a revocable living trust in order to allow their beneficiaries to avoid court. Court actions can often be time-consuming and expensive and avoiding the formal adjudication of the law is often preferable. A properly titled trust can avoid the court procedure of conservatorship in the event of incapacity as well as the court procedure of probate upon death. However, there are times when a trust ends up in court.
California Probate Code Section 17200(b) outlines specific instances when an interested party can petition the court regarding the “internal affairs” of a trust. These include:
“(1) Determining questions of construction of a trust instrument.
(2) Determining the existence or nonexistence of any immunity, power, privilege, duty, or right.
(3) Determining the validity of a trust provision.
(4) Ascertaining beneficiaries and determining to whom property shall pass or be delivered upon final or partial termination of the trust, to the extent the determination is not made by the trust instrument.
(5) Settling the accounts and passing upon the acts of the trustee, including the exercise of discretionary powers.
(6) Instructing the trustee.
(7) Compelling the trustee to do any of the following:
(A) Provide a copy of the terms of the trust.
(B) Provide information about the trust under Section 16061 if the trustee has failed to provide the requested information within 60 days after the beneficiary’s reasonable written request, and the beneficiary has not received the requested information from the trustee within the six months preceding the request.
(C) Account to the beneficiary, subject to the provisions of Section 16064, if the trustee has failed to submit a requested account within 60 days after written request of the beneficiary and no account has been made within six months preceding the request.
(8) Granting powers to the trustee.
9) Fixing or allowing payment of the trustee’s compensation or reviewing the reasonableness of the trustee’s compensation.
(10) Appointing or removing a trustee.
(11) Accepting the resignation of a trustee.
(12) Compelling redress of a breach of the trust by any available remedy.
(13) Approving or directing the modification or termination of the trust.
(14) Approving or directing the combination or division of trusts.
(15) Amending or conforming the trust instrument in the manner required to qualify a decedent’s estate for the charitable estate tax deduction under federal law, including the addition of mandatory governing instrument requirements for a charitable remainder trust as required by final regulations and rulings of the United States Internal Revenue Service.
(16) Authorizing or directing transfer of a trust or trust property to or from another jurisdiction.
(17) Directing transfer of a testamentary trust subject to continuing court jurisdiction from one county to another.
(18) Approving removal of a testamentary trust from continuing court jurisdiction.
(19) Reforming or excusing compliance with the governing instrument of an organization pursuant to Section 16105.
(20) Determining the liability of the trust for any debts of a deceased settlor. However, nothing in this paragraph shall provide standing to bring an action concerning the internal affairs of the trust to a person whose only claim to the assets of the decedent is as a creditor.
(21) Determining petitions filed pursuant to Section 15687 and reviewing the reasonableness of compensation for legal services authorized under that section. In determining the reasonableness of compensation under this paragraph, the court may consider, together with all other relevant circumstances, whether prior approval was obtained pursuant to Section 15687.
(22) If a member of the State Bar of California has transferred the economic interest of his or her practice to a trustee and if the member is a deceased member under Section 9764, a petition may be brought to appoint a practice administrator. The procedures, including, but not limited to, notice requirements, that apply to the appointment of a practice administrator for a deceased member shall apply to the petition brought under this section.
(23) If a member of the State Bar of California has transferred the economic interest of his or her practice to a trustee and if the member is a disabled member under Section 2468, a petition may be brought to appoint a practice administrator. The procedures, including, but not limited to, notice requirements, that apply to the appointment of a practice administrator for a disabled member shall apply to the petition brought under this section.”
A detailed, comprehensive, and well-drafted trust with clear provisions that address a wide variety of foreseeable contingencies can dramatically reduce the chances that it ends up in court regarding any of the circumstances described above. However, if the trust does not provide clear direction, or if there is disagreement among the beneficiaries and the trustees regarding the administration of the trust, the court has authority to provide assistance.
KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205.
Disclaimer: This article is for general information only. Reading this article does not establish an attorney-client relationship. Before acting upon any of the information provided in this article, you should consult a competent attorney who is licensed to practice law in your community.