by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization
In Leader v. Cords (3/23/2010), 210 DJDAR 4343, the court confirmed that the Trustee cannot arbitrarily postpone distribution of Trust corpus.
Glen and Alice Cords established a living trust. After several amendments, Glen died in 1999. Alice died in 2001. They had two children, Terry and Carol. The two children were to divide the trust estate equally. Terry was the successor Trustee. Upon the death of a child, that child’s respective children were to take the parent’s share. Carol died in 2002 and her two children succeeded to her interest.
In 2008 Carol’s two children filed a Petition under Probate Code §17200 to compel distribution and for $19,227.70 for attorney’s fees and costs.
The petition alleged that Terry (Trustee) gave no information Carol’s children (Rachel and Adam). They discovered Bank of America stock and demanded it be distributed. After numerous excuses, the stock was finally distributed in 2007. They discovered there was cash on hand and no accounting had been done since 12/31/2002. They demanded an accounting; then granted an extension. On May 15, 2007 Terry provided an accounting through 12/31/2006. It showed $75,000 cash and no debts.
After demand, Terry said he was “willing to make distribution of the cash only as part of a ‘global settlement.’” There had been jewelry of Glen and Alice’s which Terry and Carol had divided. Terry did not believe it was divided equitably and wanted to resolve that now.
The court found that the jewelry was not part of the trust and that Terry wrongfully withheld Trust distribution. His claim that he was withholding distribution as a reserve because Rachel and Adam were suing him was not accurate because their suit was due to his failure to distribute.
After a review of several cases, the Appellate Court discusses that Trust beneficiaries must usually pay their own fees and costs. In this case, the trial court rejected fees requested to be paid personally by the Trustee to the beneficiaries. The Appellate Court reversed and remanded for the Trial Court to determine if the Trustee, Terry, acted unreasonably and in bad faith in delaying distribution; and, if so, to award fees to the beneficiaries under Probate Code §17211(b).
John T. Anderson, Section Chair
Certified Specialist in Probate, Trust and Estate Planning
By the California State Bar Board of Legal Specialization