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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.

We posted over 100 blog articles in 2011.  While we enjoy writing each of them, there are a few favorites we have over the course of the year.  Each of the posts that made our top 11 list was also very popular with readers based on comments and feedback we received.  Here is a list of our top 11 blog posts in 2011:

1.         Top 10 Books for Trial Attorneys.  We receive quite a bit of feedback from this post.  And it remains a very good list of great books to read—must reads really—for any trial attorney.

2.         Justice Isn’t Fair.  A little post on the difference between fighting for justice (which can be expensive and emotionally draining) versus obtaining a fair result from a financial perspective. 

3.         Legal Lingerie: Fighting Over Personal Property In California Trusts and Wills.  Having the word “lingerie” in a law blog title seems to get you noticed.  But still an interesting post on what happens to the tangible personal property in an estate. 

4.         Capacity Lite—How Undue Influence Can be Used To Overturn a California Will or Trust When Lack of Capacity Allegations Fall Short.  This is one of our favorite posts on how undue influence can be used to overturn Wills and Trusts—a very popular post. 

5.         Court Decision Causes Consternation for Arbitration Clauses in Trusts.  The growing use of arbitration clauses in things like insurance contracts can be a real problem for unsuspecting parties, but the use of arbitration clauses in Trusts hit a roadblock this year with the Court’s decision in Diaz v. Burkey.  This post is a quick recap of the Court’s interesting ruling.

6.         Which Will Wins the Race?  The Documents Required For a Proper Will Contest Lawsuit.  Few things are more confusing than properly filing a Will contest in California.  This post was a big hit with lawyers and laypeople alike. 

7.         Influencing the Court to Find for Undue Influence in California.  This is our second blog post of the subject of undue influence that made our top 11 list.  This is a more in-depth look at the subject of undue influence and how it can be proven in Court. 

8.         No-Contest Clauses Do Not Apply to Challenging a Trustee’s (or Executor’s) Actions.  No-Contest clauses are a very confusing area of Trust and Will litigation practice.  But one of the areas where they do NOT apply is in challenging the bad acts of a Trustee—yet so many people don’t realize their proper application.  We received a lot of feedback on this explanatory post.

9.         The Beneficiary’s Burden.  California Trust and Will lawsuits are hard on everyone, especially the beneficiaries.  While the beneficiaries don’t have any legal duties, they do have a burden in bringing the lawsuit all the same.

10.       The Settlor Made Me Do It.  The California Court of Appeals clarified in “Estate of Giraldin” when a beneficiary is entitled to an accounting and damages for breach of trust for actions taken while the trust creator is still living.  This was new law for California.  And it also prompted a call from one of the Giraldin children, which I very much enjoyed!

11.      Motions to Compel = A Necessary Evil.  When you hold the opposing party to the requirements of the Discovery Act, you’re going to have to file a few motions to compel.  Seems everyone (well not everyone, but many people) want to bend the rules of properly responding to discovery.  This is our take on filing motions to compel when necessary.

Honorable Mention.

We have just a few more favorites—it’s hard to narrow over 100 posts down to 11 (but “top 11 in 2011” is a better title than top 15 in 2011).  So here are a few extra posts that we call our “honorable mentions:”

12.       Our Video Series.  We were, and still are, very excited to post our first series of videos on our blog in 2011.  We received tremendous positive feedback on our videos (although we may look a little stiff).  This is just the beginning; we have a few video surprises in store for 2012.  Here are all of our 2011 video series.

13.       Becoming a Discovery Ninja.  Responding to discovery thoroughly and promptly is a goal of ours in every case.  Here are a few tips on how to make that happen on a regular basis.

13.       The Wayward Will of Irving Duke.  So you want to draft your own Will?  Take a lesson from Irving Duke, his use of the words “at the same moment” caused his two favored charities to lose $5 million—passing instead to his two nephews who are not even mentioned in the Will!  A lesson on the trickery of the English language.

14.       Will Capacity vs. Trust Capacity: The Mental Measuring Stick under California Law.  Well this post is not from 2011, it was posted in December 2010, but still a useful discussion on the different types of capacity.

15.       The Intentionalities and Formalities of California Will Creation.  This is also a 2010 post that gives a basic primer on the elements required to create a valid California Will.  This is the same format we use to teach law students in our class at Chapman Law School.

We hope you enjoy these posts, and many others we have provided in 2011.  We look forward to giving you even more useful information in 2012.  

Happy New Year!

 

I have posted many articles on the wrongful acts of bad trustees and I am just getting started on that subject. There is always more to write about.

I can’t help but notice that there is a general lack of understanding about the burden of beneficiaries as well.  Legally speaking, beneficiaries of California Wills and Trusts do not have any legal obligations or duties to the Will or Trust estate. However, beneficiaries do have a duty that they must undertake to enforce their rights–the duty to take action.

A beneficiary of a California Trust or Will has rights.  And an heir of a decedent who is disinherited may have rights, depending on the circumstances.  But those rights lie dormant until you choose to make the effort to enforce them.  Therefore, every beneficiary has a duty to take action to enforce their rights.  No one is going to step in and make your life easy by enforcing your rights for you.  You can take the Trust or Will matter to court, but the court’s role is supposed to be as a neutral trier of fact and law, it’s not there to help you assert your rights–that’s your job.

Of course, undertaking to enforce your rights is not easy.  It takes time, money and an emotional toll as well.  But when you’re dealing with a bad trustee or a bad situation, you have little choice but to stand up for yourself.

Many times I hear beneficiaries complain how having this burden to enforce their rights is hard, unfair, and it simply should not be this way.  Trustees should do the right thing in the first place or siblings should be fair with trust distributions.  Of courses all of those complaints are true and well founded, I agree.  But complaining gets you nowhere.  You alone have the burden to stand up and enforce your rights.  The sooner you as a beneficiary accept this fact, the sooner you can move on and try to get something done.