The best litigation resolution and settlement tools for trustees in Los Angeles County California are in fact very simple in nature. In essence, the trust settlement tools allow for communication with the beneficiary or heir which opens the door for settlements.
Taking the time to offer the simple settlement tools in trust and probate cases is well worth it, as it may save you lots of money in litigation. Management of trustee and beneficiary disputes and their resolution involve many factors. Just as beneficiaries are given the ability and many tools which protect them against malfeasance by trustees, so have been the trustees who sometimes deal with unreasonable beneficiaries.
California fiduciaries are held to a standard of care. Trust documents often describe the standard of care of the trustee, but where they fail to specify the care, California law states that the trustee is held to a reasonable trustee standard. A very detailed look at the standard of care described in the trust can eliminate most issues in litigation. Many times, the trust states that the trustee is not liable for actions, unless loss is resulted from gross negligence. Gross negligence is not the same as negligence.
At the same time, where the trustee has special skills, the courts can expect the trustee to use his special skills in managing the assets of the trust. Trustees who invest the trust's assets are held to a prudent person (Prudent Investor Rule) standard in California unless the trust specifically relieves them of that specific standard.
For example, the trust may specify that the trustee may hold a property vacant for a period of time after the death of the settlor.
Litigation can occur where the parent has left no specific instructions before death and one child lives in the property of the parent and refuses to pay rent.
Managing expectations of the beneficiaries where one child may live in the property of the parent can be a simple task, if done when the parent is alive and competent. For example, the trust instrument may allow any beneficiary to live in the property for a specific period of time after death of the settlor rent-free, or at a low rent.
What can a Los Angeles trustee do to manage potential disputes among a successor trustee and beneficiaries?
1. Give Notice of Proposed Action. For example, a trustee who seeks to charge a beneficiary rent during the period of administration, but before distribution should give Notice of Proposed Action to determine the level of potential disputes.
2. Give Notice of Proposed INACTION. California law allows a trustee to give Notice of Inaction where the trustee seeks not to take action on a particular issue. For example, this can mean that even though the beneficiary may expect the trustee to rent the house, the trustee will not be renting it, because the cost of bringing it up to rent standards is too high.
3. Seek pre-litigation mediation. Trustees and beneficiaries who may not agree on certain issues, such as sales price, sale date and distribution date can often prevent future disputes when parties realize the cost of litigation and want to act timely to prevent harm in a declining market. There are many times in a declining market where the beneficiaries do not recognize market value as a result of a failure in communication and an early agreement regarding sales price and sales timing.
4. Obtain instructions from the court. A Petition for instructions is sometimes the best remedy for preventing litigation. Before a trustee takes action, he or she can seek instructions from the court. This can be an especially useful tool where the trustee expects disputes regarding the manner of distribution or trustee's compensation.
5. Present a settlement agreement early. Early mediation and early settlement offers resolve cases. Settlement agreements which involve specific actions of the trustee can be drafted quickly and prevent future disputes on single issue disputes. Once entered, the trustee and beneficiaries can limit the scope of the settlement, but agree on its enforcement and admissibility in the event there is a future disagreement on that issue. A settlement agreement can be presented before mediation or during mediation and often protects all parties from significant legal fees which can be expended during litigation.
Mina N. Sirkin is a Trust and Estate Litigation Attorney in Los Angeles, California. Ms. Sirkin is a Board Certified Specialist Attorney in Estate Planning, Probate and Trust Law by the Board of Legal Specialization of the State Bar of California. For consultation appointments about settling probate and trust cases or litigation prevention in trust and estates, call Karen Reyes at 818-340-4479. https://SirkinLaw.com/attorneys.html
Mina N. Sirkin, Specialist in Trust and Probate
Law in Los Angeles Ca