Trust and will disputes are confusing because the way you see your family and their assets can be very different from how the law sees it.  You may see your family as one group of people related by blood.  If one of your siblings is taking advantage of your parents, then you should be able to step in and help protect them.  Or if your parents pass away and their assets are not being distributed according to your parents’ desires, then you should be able to place all the assets in a big pile and force a proper distribution among your family members.Asset Puzzle.jpg

Well not so fast.  The law makes things complicated because it does not see these issues as a “family” problem.  Instead, the law sees individual people, each with their own set of rights—some rights being enforceable now and some being enforceable later (if at all). 

For example, if a parent is being controlled by one sibling and that sibling has taken control of the parents’ trust, you cannot simply demand a Trust accounting from the bad brother or sister.  Why not?  Because you do not have a current right to do that.  When a parent creates a revocable Trust the Trustee only owes a duty to the Trust creator (called a Settlor—i.e., the parent).  Therefore, only a parent can demand an accounting from the Trustee—no one else has that right and no one else can enforce the parents’ rights.  The exception is if a conservator is appointed on behalf of the parent, then the conservator can exercise the parent’s right and force an accounting from the Trustee.  Once the parent dies and the children become vested beneficiaries of the Trust, then the children can demand an accounting (including an accounting for the period while the parent was still alive). 

It may seem like a family matter to you when a sibling is wreaking havoc with a parent, but the law sees individual people with individual rights—not a family matter.

The same is true for disputes over a parents’ assets after they die.  You may see a pile of assets your parents owned while they were alive, all of which they controlled and benefitted from.  Things like their home, joint bank accounts, life insurance, retirement accounts, brokerage accounts, bank accounts, CD’s, etc.  If your parents owed all of these assets then you should be able to deal with them in a single action, just pile them on the table and let the dispute begin. (See our previous discussion on how assets pass at death.)

But after death, the law sees assets very differently.  The law places each asset in its own box that is governed by its own set of rules.  The assets titled in the name of a Trust pass under Trust law, but they have nothing to do with assets passing by beneficiary designation—like life insurance and retirement accounts.  And joint assets pass under their own law, which is different from assets held in an individual’s sole name, which passes under a Will as part of the probate estate. 

Filing a Trust contest will help to undue assets passing under a Trust, but it does nothing for assets passing by joint tenancy or beneficiary designations.  So all those life insurance proceeds and retirement accounts have to be contested in different legal actions.  It is not uncommon to have a Trust contest petition, a Will contest petition, and a third type of probate petition all in a single matter. 

Why is this all so confusing?  Thanks to a few centuries of legal evolution where people came up with new and exciting ways to side-step Wills and the probate process.  Things like Trusts, joint tenancy, and beneficiary designations were meant to make passing assets easier.  That may be true when a parent plans out their assets ahead of time.  But when things go astray and assets have been wrongly distributed, this maze of laws governing different types of assets can be a difficult obstacle to overcome.

So beware, family issue involving Trusts and Wills are far more complicated than they appear.  

Conservatorship is the Court process for taking control of an adult’s finances and personal care in California when there is no other planning in place—such as a Trust or Will.  (Some states refer to it as “guardianship,” but in California guardianship only applies to minors–conservatorship is for adults).

Conservatorships are supposed to “conserve” a person’s estate (as in “to keep in a safe or sound state…especially to avoid wasteful or destructive use of…” as defined by Merriam Webster).  Yet, even a routine conservatorship proceeding (one that is not contested by family members) is expensive to initiate, time-consuming to create, and burdensome to maintain. It hurts less to simply hit yourself in the head with a hammer than to go through a conservatorship proceeding.

But when a conservatorship proceeding is contested by dueling family members wanting to be conservator, now the pain really begins.  And the costs (both financially and emotionally) are downright excessive.

Conservatorship proceedings start with a petition filed by a family member reciting why the proposed “conservatee” (the person in need of help) can no longer manage his or her personal and financial decisions.  Then there are loads of other documents that go with the initial petition.

If other family members disagree with the conservatorship filing, or want a different person appointed as conservator, then they must make an objection to the original conservatorship petition and then file their own petition for conservatorship (referred to as a “competing” petition).  The Court appoints an attorney to represent the proposed conservatee, and the matter is ultimately set for trial and tried before the court to determine whose petition will win.

Sounds easy enough right?  But what this little overview fails to convey is the amount of time, money, and emotional toll that goes into a lawsuit of this nature.  Conservatorship cases are difficult to begin with because there is usually an elder adult caught in the middle; as opposed to Trust and Will contests, where the dispute revolves around a pile of assets.  The effort to conserve a person’s estate often results in the excessive waste of that estate instead. 

Of course, the Court acts as a safeguard to the estate and will refuse to reimburse the parties for their litigation fees and costs if they do not directly benefit the conservatorship estate (or even if they do benefit the estate, the reimbursement will be refused if the estate cannot afford it). 

The end result is that no good deed goes unpunished.  The parties bear the costs, the estate bears some too, and the family feels bruised, wounded and far worse from the wear of conservatorship litigation.  The alternative is to have some plans in place (such as a California Trust and related powers of attorney) so that conservatorship can be avoided.  All too often good planning is neglected and the penalty of such neglect is facing the excesses of conservatorship in California.