Abused beneficiaries generally fall into two categories. They are:
The following article will discuss their details through scenarios which are commonly handled by the Law Office of Eric J. Rechsteiner.
Through no fault of their own, trust beneficiaries are many times the victims of abusive trustees who do not understand – or care to follow – their legal obligations. You should know trustees are held to a higher standard of care and are required by law to always act with the utmost good faith in the best interest of the trust beneficiaries. For example, trustees must avoid conflicts of interest, must treat all beneficiaries fairly, regardless of whether they are current or remainder beneficiaries, keep beneficiaries reasonably informed about the trust and its administration, and invest property in a diversified manner.
When a trustee fails to act or worse refuses to act in accordance with their fiduciary duties, the law will consider this behavior a breach of trust and/or a breach of fiduciary duty. When this happens, the law many times will impose a harsh punishment upon the trustee due to their egregious violation of trust.
The trustee can then be surcharged for any loss or depreciation in the value of the estate, interest on the loss, rent for time trustee lived in trust property, attorney fees / treble damages, and deny the trustee the right to receive fees or pay attorney fees from the estate.
Let’s a say you are a beneficiary of a trust and the trust says you have the right to inherit one-million dollars ($1,000,000.00). This is clearly stated in the trust document and nobody disagrees that you have the right to that one-million dollars ($1,000,000.00). But, for whatever reason, the trustee refuses to make the distribution of the one-million dollars ($1,000,000.00) to you. Perhaps the trustee does not believe that you will make wise choices with the money that is yours under the trust. Or maybe the trustee wants to use that money for themselves as they go forward in the trust administration. Or maybe the trustee just wants to be in the power position and give you, a sibling of the trustee, a hard time that they have bad feelings for.
There are many reasons why a trustee refuses to make distributions but ultimately if a beneficiary has a right to those distributions and they are not being made, that is an abused trust beneficiary. That is somebody who has a right to money and the trustee says no I’m not going to give it to you as the trustee has no legal right to stand on that justifies their refusal to distribute your money to you.
In this scenario you will have to get a lawyer involved and the lawyer will ask the trustee to make the distribution on your behalf. If the trustee refuses, unfortunately you will have to file a petition in the probate court and get the court to order a distribution of those assets.
This is someone who was a beneficiary of the trust but just before a decedent passed away someone comes along and gets that beneficiary taken out of the trust. For example, your mom (Ima) states in her trust that she’s going to give her three-million-dollar ($3,000,000.00) trust estate to her three children in equal shares. This means each child will equally receive one-million dollars ($1,000,000.00). In this scenario, if one the beneficiaries is written out of the trust two-weeks before mom dies, and that beneficiary’s one-million dollars ($1,000,000.00) disappears under the new amendment to the trust, that is an abused trust beneficiary. If mom did not intend that, if exercise of undue influence was taken over mom in order to get her to do that, then that trust beneficiary will more than likely have to file a petition in court to invalidate the amendment that was created that removed them from the trust.
These are generally the two categories of abused trust beneficiaries in California. If you think you fall into one of these categories more than likely you are going to need a lawyers help to under stand your rights and then once you understand those rights, decide on how you want to move forward to protect the interests you may have in a trust.