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Hi, this is Keith Davidson at Albertson & Davidson.  In this video, we’re discussing trustee surcharge.  How do you hold your trustee liable for the damages that they have caused to your trust estate?

The number one way that you hold a trustee liable is you have to go to court on a petition asking the court to order the trustee to pay damages back to the trust.  That’s what we call a surcharge.  And you’re allowed to ask for a surcharge for any harms and losses that the trustee has caused to your trust estate.

You usually start by filing a petition with the court asking the court to order a surcharge against the trustee.  But you have to know what it is want to surcharge.  So if you know that the trustee has caused damage by taking a specific act, and you know how much the damage the trustee has caused, then you can go straight forward, file your petition and ask the court to order the trustee to pay that back.

If, however, you’re unclear as to the damage that the trustee did, then you’re going to have to do a little bit more than that.  And that comes in a couple of different way.  One way is you could file a petition asking the court to order the trustee to account.  So then the trustee has to do a formal trust accounting.  And that essentially will become your roadmap for whatever the trustee surcharges will be.  Because in that accounting, you should be able to see where the problems arose.

Also, using that accounting, you can start doing discovery, issuing subpoenas, getting bank records, getting financial statements, getting records from escrow companies.  And you can start piecing together the information yourself and finding out where the damage occurred to your trust.  Once you have that information, then you can ask the court to order the surcharge.

So it really depends on what information you have heading into the case.  The more information you have, the more likely you are to go straight into the petition asking for a surcharge.  The less information you have, you’re going to have to take the first step of becoming informed and then you can sue the trustee for surcharge.

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Hi, this is Keith Davidson from Albertson & Davidson.  In this video, I want to talk about remedies that the court can use to fix your trust problem.  Under Probate Code section 16420, the court has a right to take certain actions against trustees in order to fix whatever problem you’re having with your trust.

Number one on that list is that the court can compel the trustee to take a certain action.  So, for example, if you’re entitled to a distribution of a house from a trust and the trustee refuses to make that distribution, the court has a right to order the trustee to take that action and distribute that asset.  And typically, that’s something that we’ll do on a petition for instructions.  So we’ll file a petition for instructions, that’s the name of the petition, and we’ll ask the court to compel the trustee to take an action.  And we’re allowed to do that and the court’s allowed to take that action under Probate Code section 16420.

The next thing the court can order the trustee to do is not take an action.  So let’s say the trustee is going to do something that will harm the trust.  Maybe they’re going to sell a property at below market value.  The beneficiary can come in and ask the court to not allow that action to take place.  And that’s called enjoining the trustee and the court can do that.

The third item the court can do is require the trustee to pay damages back to the trust for whatever harms the trustee has caused to the trust estate.  We’ll talk in a separate video about how you get to the amount that the trustee has to pay back.  But, for purposes of this video, you should know that the court can order the trustee to pay money back to the trust.  That’s one of the remedies the court has.

Number four is that the court can order the appointment of a temporary trustee or what we call a receiver to manage the trust estate under the court determines whether the main trustee should be permanently removed.  By appointing a temporary trustee, the court can have a neutral third party step in, make sure that everything’s safe during the litigation, and see whether or not whether the trustee should be permanently removed.  This is a common remedy that we ask for in a lot of our trust cases, and this is something the court has the power to do under the Probate Code.

Number five follows that up, which is the court has the right to permanently remove a trustee.  That typically takes a trial, a removal trial, where you have to go and present evidence.  But if the court is persuaded that this trustee should be removed for breaching their fiduciary duties, then the court has the power to apply that remedy and remove the trustee.

Number six, the court has the right to set aside trust actions.  So whatever action the trustee has taken, the court can set that aside.  There’s one exception, however, if the trustee has sold assets to a third party in an arms’ length transaction and that third party has paid full value in that transaction, for whatever asset or whatever the situation was, then the court cannot set aside that action.  Because, the law presumes that this innocent third party didn’t know what was going on with your trust, didn’t understand that there was a problem.  They shouldn’t be penalized for that, the trustee should.  So, instead, the trustee would just have to pay damages back to the trust rather than setting aside an action.  But barring that, the court can set aside trust actions as one of the remedies.

Number seven, the court has the right to reduce the compensation of the trustee as a remedy.  So if a trustee has breached his or her fiduciary duties to the trust and they’re requesting fees, the court has the right to reduce those fees, or even eliminate them altogether, if that was necessary to meet the ends of justice to make the trust whole.  That’s one of the remedies has.

And, number eight, the court has the right to impose an equitable lien, sometimes also referred to as a constructive trust, and to allow you to go out and trace assets.  So if the trustee has taken assets out of the trust, put them in their own accounts, put them in their own name, the court has the right to force the trustee to give those back to the right beneficiaries.  And that’s usually done through an equitable lien, constructive trust, or by allowing the beneficiaries to trace the assets and see where they ended up and pull them back into the trust.

So those are the remedies that the court has to try and fix your trust problem.

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Hi, this is Stewart Albertson of Albertson & Davidson and I want to talk to you briefly about the meet and confer requirement that is imposed on us by many statutes in California law.

A meet and confer is where we are required as lawyers to meet with one another, whether it is in writing or on the phone, or at lunch or wherever we might meet, maybe at the courthouse after a hearing.  And discuss certain issues in a case to see if we can come to resolution of the issues ourselves, just the lawyers.  And, as you can probably guess, it rarely happens where lawyers come to resolution on these matters.  But the law wants us to attempt to try to resolve any differences we have in the case before we go and file any type of motion with the court.

We see these meet and confer requirements in discovery all the time.  So we propound discovery to the other side, which are written questions, saying that you must respond to our written questions within a certain time frame.  Generally thirty days.  Once those answers come back in, if we’re not satisfied that they were answered properly, under the discovery act, we can’t just run off to court, file a motion, waste the judge’s time, waste the court administrator’s time with a motion, prior to doing what we call a meet and confer.  And it’s a lengthy process.  We’re required to draft a long meet and confer letter to the opposing attorney and explain why we think they need to answer the discovery better.  Many times, they’ll tell us they think they’ve answered discovery just fine and if you think you need to file a motion to compel, go ahead. And then we file the motion to compel and ask the court to order the other side to answer the questions as required by the discovery act.

It’s important, though, that we do that meet and confer process first or the judge is not going to listen to our motion.  The judge wants to make sure that we at least attempt between the lawyers to resolve the differences before we run off to court and file a motion.

Recently, California amended several of its statutes regarding demurrer and motion for judgment on the pleadings.  And those were pleadings that we generally see right at the beginning of a case.  And we saw many defendants using these just as a response to any case that was filed against their client.  They would just automatically file a demurrer or a motion for judgment on the pleadings.

California law says now we want the lawyers to meet and confer prior to filing a demurrer or motion for judgment on the pleadings.  The whole idea behind a meet and confer, again, is for the lawyer who are hopefully responsible adults to sit down, analyze the case, analyze the chances of winning or losing a particular motion, whether it’s a demurrer, motion for judgment on the pleadings, motion to compel additional discovery.   Have them meet and confer and hopefully resolve that matter between themselves as responsible adults before we have to go tattle to the judge and get the judge to make a decision about what needs to happen.

I will tell you this – judges generally don’t like to have lawyers fighting in court over something that they should have been to resolve outside of court.  So your lawyers will attempt, hopefully, to do the best they can to resolve matters through the meet and confer process.  If they’re unable, then they’ll file whatever motion they need to to enforce your rights.

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Hi, this is Stewart Alberton with Albertson & Davidson and we’ve been discussing contingency fee agreements and the benefits, the advantages and disadvantages to entering into a contingency fee agreement.  And I want to talk to you about one more benefit on the contingency fee agreement is the costs that your attorney agrees to pay while the case is going forward.

Now, most costs are not significant.  They’re real money, but they’re not significant, such as the filing fees, fees to get a court reporter to do a deposition, subpoena fees.  We’re talking ten, twenty, thirty thousand dollars in the life of a case.  Maybe more, if it’s a bigger case, but it’s not going to be too much more than that.

But there is one set of costs that go really high, really fast in a trust and will case where lack of capacity or undue influence is an essential issue.  And that has to do with hiring an expert.  An expert in this case would be either a neurologist or a psychiatrist.  Somebody that specializes in forensically going back and looking at medical records to determine if a decedent was, either they did lack capacity or where they subject to the exercise of undue influence.

These experts are very good people and so we’re not upset at them for how much they have to bill us, but we do want to point out that it is quite expensive to hire them.  In many cases, it will be ten to fifteen thousand dollars just to hire them, and then, because they have so much education and experience, and it’s such a specialized area, they charge generally anywhere between four hundred and a thousand dollars an hour.  And that time is spent reviewing medical records, coming to determine opinions.  If a decedent did in fact lack capacity at the time a trust or will was created, or if the decedent was subject to the exercise of undue influence.

Sometimes you have to have more than one of these experts in a case.  So let’s say that you hire a lawyer on a contingency fee agreement.  Any trust and will contest where you have to hire one of these experts, and that expert bills out at say $40,000 for the life of the case.  If you lose that case at the time of trial, which is a bad result for everyone and nobody hopes we lose, but if you do lose that case at the time of trial, the lawyer is the one that is stuck with the $40,000 bill.  Not you, the client.  So that’s just one more benefit of contingency fee agreements.

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Hi, this is Keith Davidson from Albertson & Davidson.  In this video, we’re discussing real property taxes. When a person passes away and they transfer assets, real property, from themselves to their children, under California law, the children are allowed to file a parent to child exclusion.  And what that does, it prevents the house or the real property from being reappraised for real property tax purposes.  And that can be a real benefit to the child.  If the parent bought the house many years ago, the tax valuation for real property tax purposes might be very low.  Whereas, if you were to reappraise the property at current values, the value would be much higher and resulting in more property tax rather than less property tax the way the parent had it.

So that property tax basis, that appraised value that they used to determine the amount of tax, it can remain intact if property passes from parents to children.  But you have to file the proper exclusion form.  And the question is does the trustee have the responsibility for filing that form and that all depends.  It depends on the type of trust that you’re dealing with and how long these assets are going to remain in trust.

So the property is supposed to pass out quickly to the beneficiary and it happens in a manner of a few months, but it might be the responsibility of the beneficiary to file the parent to child exclusion.  If, however, the property is going to be held in trust for a significant amount of time, then the trustee would have the obligation to file that parent to child exclusion.  So it really depends on the facts and circumstances of your case as to who has the responsibility for filing the exclusion.

But the thing you should and always remember is that if you’re receiving real property from your parent, be sure that some way, somehow, somebody files the parent to child exclusion.

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Hi, this is Stewart Albertson with Albertson & Davidson and I want to talk to you about an issue that we are seeing more and more of and that has to do with statute of limitation.  Statute of limitation being the time period that you’re allowed to bring a lawsuit, whether it’s in probate court or civil court.

What we’re seeing and this video may be more to the practicing attorneys out there, but it’s also something the beneficiaries will want to be aware of.  We’re seeing people miss these statute of limitations in trust and will cases and we believe the reason for that is is because it’s a complex analysis to determine what particular statute of limitation applies at what particular time at what particular proceeding in a trust and will contest matter.

Let me give you an example from another area of law to show you why we’re having issues with the trust and estates statutes and we’re seeing those come up more often where people are making mistakes.

Let’s talk about personal injury.  Personal injury is very simple.  If somebody crashes into you in a car.  If somebody punches you in the face, you have two years to bring a lawsuit against that person before the statute of limitation runs.  In other words, you can do anything you want for up to two years, as long as you file your lawsuit before the end of two years.  You can bring a personal injury action against the person who hurt you.

Well, let’s come back to trust and estate law now.  It’s not that simple.  There’s various statute of limits that apply at times.  Let’s talk about the bright line statute of limitations pertaining to decedents.  The general rule is that when someone dies, and everyone should know when someone dies, that’s pretty easy to ascertain.  You have one year to make a claim against that person.  But that year can be shortened to as little as 120 days, depending on the circumstances.

If a petition for probate goes out and you have a will that’s admitted into probate.  Once that’s admitted into probate, now you have 120 days to file a claim against the decedent.  To make matters worse, if you’re doing a certain type of claim against the decedent, you’re going to have what we call a creditor’s claim in the probate estate of the decedent and you’re going to have to file a lawsuit all before the end of the claim period running.

In other types of cases, you only have to file the creditor’s claim but you can file the lawsuit after a year.  And so this becomes confusing to many lawyers as it may be to you now as I’m trying to explain it.

There’s also another complication where you have financial elder abuse claims.  This is where someone has a done a wrongful taking against somebody that’s a dependent adult or somebody that’s older than 65 years of age in California. We don’t want people abusing our elders.  We don’t want them taking their finances in a wrongful taking.  So the statute allows us to sue somebody, the wrongdoer in that case, for up to four years after the wrongful taking.  So we literally can have four years going by, and as long as we get the financial elder abuse case on file before the four years runs, chances are, we beat that statute of limitations.  However, if you were given statutory notice under a trust, which gives you 120 days within which to file a trust contest, and you do not file that trust contest within 120 days, you may be precluded from filing a financial elder abuse claim even though it gives you four years.

One more thing to add and that would be what if the drafting attorney, the attorney that drafts the trust or will, what if they have made a mistake and they hurt you as an intended beneficiary of that estate plan.  In that case, you have one year from date of notice that you knew you were harmed by the attorney’s drafting, to file a legal malpractice case against that attorney.  If you don’t have notice and you discover it later, more than one year after the event took place, you may be able to argue you didn’t have actual knowledge or that you shouldn’t have known about the harm that took place, and you may be able to use a four year statute of limitations to sue the attorney for legal malpractice.

The whole point of this video is not for you to understand all of these varied statute of limitations, some as short as 120 days, some as a long as a year, some as long as four years, is to show you that there’s complexity in each one of these trust and estate cases, you need to have expert analysis of your case so that somebody can see what the facts and circumstances are and what statute of limitations are going to apply to your case moving forward.

If you miss a statute, chances are you’re going to be barred forever from bringing your claim forward.  So even those these are complex, difficult to understand, it’s something at the very beginning of a case you have to spend the time to understand, make sure you’re not missing anything, especially on the shorter ones such as the 120 days, because that one comes and goes very quickly.

Hopefully I haven’t confused you too much.  I’ve confused myself a little bit in going over all this.  All I want to point out is, this is a complex areas, these statute of limitations in trust and estate matters, make sure you get somebody that’s qualified to explain them to you and you understand the time limits you have to bring your claim forward in either probate court or civil court.

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Hi, this is Keith Davidson from Albertson & Davidson.  In this video, I’m talking about can you release your trustee from liability and, in particular, can a trustee force you to sign a release in order to get your trust distribution?  And you see this happen fairly often or more often than it really should.  Which is a trustee will say, “I have your money.  I’m ready to distribute it out to you, but I won’t give you a dime until you first sign this release relieving me, the trustee, of all liability under California Probate law and Trust law.”  And the answer is no.  A trustee cannot force you to sign a release as a condition to getting a distribution of your trust share.

Now, that doesn’t mean that a trustee can’t still ask you to sign a release.  You voluntarily can choose to sign a release if you’d like to.  And there are some reasons why you might want to do that.  Because if you don’t sign a release, the trustee might choose, instead, to seek court approval of a trust accounting.  And the reason why a trustee would want to do that, is if they disclose all of their activities in a trust accounting and they file it with the court, and the court approves that accounting, then all of those acts cannot be sued on later.  So, once the trust accounting is approved, the beneficiaries can’t come back later and sue the trustee for those acts.  And for that reason, the trustee may say, “Well, I either need you to sign this release voluntarily, or I’m going to have to file an accounting with the court.  And I’m allowed to use trust funds to pay for that preparation of that accounting.”

So you’re in the unusual position where the trustee cannot withhold your money, pending you signing a release.  But the trustee can spend some of your money to get a trust accounting prepared and filed with the court and seek court approval of that accounting.

That doesn’t mean that the trustee can withhold all of your money, however, because even preparation of a trust accounting, it only costs so much.  So it might cost five, ten, fifteen thousand dollars to hire an accountant to do a trust accounting.  You might have to pay a lawyer similar amounts, but it’s not going to be your entire trust share, in most cases.  So if you’re entitled to a million dollars, the trustee can’t withhold a million dollars because they want to get court approval of an accounting.  They have to give you a distribution.  They can hold a reserve, let’s say a hundred thousand dollars out of your million, but they can’t keep the whole million dollars hostage until the court approves their accounting or until you sign a release. And, unfortunately, this happens quite often.  Trustees will threaten that they will withhold your money unless you sign a release, and unfortunately, a lot of times people feel compelled to sign those documents.

And our advice would be don’t sign the documents.  Get some advice before you take any action.  And hopefully, the trustee will do the right thing, will follow California Trust law, and will give you your trust distribution.

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Hi, this is Stewart Albertson with Albertson & Davidson and I want to talk to you about how we find assets in a trust or will contest case.  And this is a problem.  This is something that we have a hard time explaining to clients, at times, because the clients come to us and they say I know Mom and Dad had gold bars, silver bars, cash in a safe.  I know that there’s some personal property items that are out there that Mom had and my brother’s taken them and sold them to a pawn shop.  How do we prove that?  How do we get the assets back?

And there’s some good news and bad news here.  But, the good news is, if an asset has a title to it, such as a bank account, that has a title.  A car has a title.  A house generally has a title.  Retirement accounts have titles.  These are generally larger assets in a person’s estate.  We can generally find those assets out there by serving subpoenas on parties that have those documents so that we can look at them and determine what the value of those assets were on the date of death, maybe even prior to the date of death, and then, of course, what they’re worth today.  And we can ask whoever was in control of those assets after someone passed away, what have they done with those assets?  Have they spent them on themselves?  Or have they saved them for the rightful beneficiaries of the trust or the will?

So that is one way that we find assets in these cases.  Sometimes I feel like clients look at us and say, you’re the lawyer, you’re the expert.  Can’t you just go out there and find these assets?  Aren’t these assets just available for you as a specialist in this arena, to go and find.  And what I tell clients is, I wish that were the case.  I wish I had a magic wand that I could waive and I could find all of the assets that had disappeared or gone missing that once belonged to your Mom or your Dad prior to their passing.

There’s going to be some assets that you’re just not going to be able to find in these cases.  Rarely will you find someone whose stolen assets.  Rarely will you have them come to a deposition and they admit that they’ve stole assets.  Even if they get to the point where they say yes, there were some cash in a safe of $200,000.  They’re going to tell you that Mom or Dad gifted that cash to them.  And then that will be the new argument, whether it was a gift, whether it was a loan, whether they took it without permission.  That will be an issue to decide at the time of trial.  But, in most cases, if $200,000 cash is missing, changes are finding it are not going to be great in these cases.  I wish that was not the state of affairs for trust and will cases in California, but, ultimately, if we have titled assets, we can find them.  If we have untitled assets, it can be a problem and the sooner people understand that, come to grips with that, it’s much easier for us to move forward in the case.

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Hi, this is Keith Davidson from Albertson & Davidson.  In this video, we’re talking about trust accountings.  And we just finished a video where we talked about when you are entitled to a trust accounting and it depends on the type of beneficiary you are.  But there’s two instances where you may not be entitled to a trust accounting, no matter what type of beneficiary you are.  And the first instance is if the trust waives an accounting.

This is where you have to read through your trust document to find out if the trust document waives the trustee’s obligation to account.  Normally a trustee has an obligation to account during certain periods, like once a year, or any time there’s a change of trustee.  But if the trust document waives that accounting right or obligation, then you’re not going to be entitled to an accounting.

You can still get one, however.  If you go to court and you can show that there’s a high degree of likelihood that the trustee has breached their duties of trust, then the court can still order an accounting, even though the trust document waives it.  But the trustee doesn’t have to automatically give you an accounting.  So look at your trust document and see if it waives an accounting.

The other instance is if you, as a beneficiary, waived the right to an accounting.  You may voluntarily sign a document waiving your right to an accounting and, in that instance, the trustee does not have to account to you any longer.  You can revoke that waiver and you can do the revocation of the waiver of accounting at any time.  However, once you revoke a waiver of accounting, the trustee only has to account for actions after you did the revocation of the waiver.  They don’t have to go all the way back.

But you’re still entitled to information.  So even if you can’t get an accounting, at a minimum, you should be asking for information about your trust.  You should see the bank statements, the brokerage account statements.  If real property is sold, you should see the closing statement.  You have a right to be reasonably informed about the business of your trust and you should ask for that information in writing.  You don’t have to do anything fancy.  Just send off a letter, an email, or a fax, asking the trustee to give you the documents so you can double check that everything is running smoothly.

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Hi, this is Keith Davidson from Albertson & Davidson.  In this video, I want to talk about whether or not you, as a trust beneficiary, are entitled to an accounting.  And the answer is maybe – which is a typical lawyer answer.  But let’s go through who is and who is not, necessarily, entitled to a trust accounting.

For starters, all current beneficiaries, income and principal beneficiaries, are entitled to an accounting of the trust assets – unless, the trust actually waives that right.  But if you are a current income or principal beneficiary of a trust, you are entitled to an accounting.  If you’re a remainder beneficiary, meaning that your rights aren’t vested yet, but they’ll come into place a current beneficiary passes away.  Then you may be entitled to an accounting.  But you’re not entitled to an accounting as a matter of right.  It’ll be up to the discretion of the California Probate Court.

What you are entitled to as a remainder beneficiary is information.  So you should be able to get and you are entitled to receive any information about the trust assets, the trust administration, and anything else that deals with the business of the trust.  Now that’s different from an accounting.  An accounting is a formal document that sets out charges and credits in a very systematic way, as required by the Probate Code.  But, information can be just as good if not better.

So for example, if you receive a copy of all the bank statements or all the financial account statements, that might be just as good as an accounting because you can look at those and you can see what’s been happening with the finances of the trust.  So, just because you’re not entitled to an accounting doesn’t mean that you’re left out in the dark.  You might still be entitled to information.

There’s a big caveat here.  Everything I just talked about is for irrevocable trusts.  Those are trusts that can’t be amended or changed.  If the trust is revocable, then the trustee only owes a duty to the person who has the power to revoke it, which typically is the person who created it.  If Mom and Dad create a revocable trust and they named themselves as trustee, they don’t have an obligation to give you information while they’re alive.  But, once they pass, and the trust becomes irrevocable, which is usually what happens, now your rights come into existence and you have a right to either an accounting or information, depending on the type of beneficiary you are.