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Conflict of Interest Between Trustee and Beneficiary 

Can a Co-Trustee Act Alone and Sign Trust Documents? 

Can a co-trustee act alone? The answer to this is no unless the Trust document states otherwise. In the case where the Trust does not explicitly state, the trustee and the co-trustee must make all decisions unanimously to push the trust administration process forward.

Probate Topics, Probate Litigation 

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Tips A TRUSTOR SHOULD CONSIDER

Conflict of Interest Between Trustee and Beneficiary

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The grantor carefully selects a trustee. Upon the death of the grantor, the Trust becomes an irrevocable trust. California courts have specific timelines and requirements related to Trusts. 

Some of these requirements include:

  • The trustee needs to provide an inventory of all assets belonging to the Trust.
  • The trustee must give detailed accounting reports to the Courts.
  • The trustee must provide a copy of the Trust, complete with amendments, to all beneficiaries.
  • The trustee is responsible for administering the Trust in a timely manner.
  • Beneficiaries will have 120 days from the date that they receive notice that they will inherit to contest the Trust.
  • During the trust administration and probate process, the beneficiaries can ask the courts for removal or change in trustee.
  • If the beneficiaries suspect that the trustee is misappropriating funds, showing personal gains, or showing some beneficiaries’ preferential treatment, they can contest the Trust.

Who Has More Right A Trustee Or The Beneficiary?

The trust instrument dictates the extent of the trustee’s responsibilities. Since the trustee needs to make sure that the decedent’s wishes are fulfilled, the trustee ultimately has more rights. The beneficiaries do have the right to contest the Trust or request that the courts remove a trustee if certain conditions are proved. The rules of law guiding the courts are specific as to what would qualify as an actionable condition. 

Trustee Duties In California

The State of California has some strict regulations in place when it comes to the trust process. Individuals named as trustee of an irrevocable trust must follow the rules and restrictions closely and follow the trust document. Court oversight requires detailed inventory and accounting to be upheld and reported throughout the life of the Trust. Those who are named a trustee must make sure that they focus their actions on the Trust’s details and not commingle funds or actions that would be considered a gain for themselves or someone else outside of the Trust. Trustees always need to abide by the trust document instructions and strive to fulfill the original grantor’s wishes as outlined in the documentation. 

Trustee Rights

As an essential part of their fiduciary duty to the Trust, the appointed trustee has some specific rights in performing their duties. As part of the responsibility of disbursement of assets, the trustee can choose how particular assets are liquidated. They have the right to select the professionals they work with to assess the asset’s fairest value before liquidation. If they have a question at any point in the process, they have the right to seek legal counsel. Any costs associated with the appraisal of assets or legal counsel are billed to the Trust itself. The trustee has the right to fair compensation, by the Trust, for their time. It is the liquidation of assets that most frequently are the basis for an accusation of misappropriation of funds and breach of fiduciary duty. If, as a trustee, you believe that your rights are being denied or are in question, call your trust lawyer for guidance. 

Trustee Beneficiary Conflict

Trustees and beneficiaries do not always get along. Conflict of interest between them can be as minor as a temporary communication breakdown. Consistent communication between the trustee and the heirs can keep many disputes to a minimum. If there is a 

 conflict of interest between a trustee and beneficiary, California beneficiaries can request that the courts remove the trustee. The courts will carefully review the dispute and determine if this action is appropriate. Any court action will slow down the trust disbursement process.

Trustee Conflict of Interest

A trustee can be found in breach of their fiduciary duty if their actions bring them personal gain. If the trustee is also a beneficiary, it can get very complicated. Ultimately, the beneficiaries cannot view the Trust as favoring one beneficiary over another. This can be a common misunderstanding in a trustee beneficiary conflict. Court oversight carefully tracks inventory of assets and requires detailed accounting reports looking for discrepancies. If the courts discover a breach or a misappropriation of funds, the trustee can be removed or held liable. It is always best if a trustee receives guidance from a trust attorney throughout trustee conflict of interest problems. 

When To Seek Legal Counsel

Trust administration can be confusing. The trustee can seek counsel and have it billed to the Trust as long as any counsel fees are included in the accounting reports. If a beneficiary questions any of the trustee’s actions or there is a suspicion of misappropriation of funds, a trust attorney can guide you through the court process. A trust attorney can also help serve as an intermediary between the trustee and beneficiaries. Call today for guidance on any of your conflict of interest between trustee and beneficiary California issues.

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