Probate, Estate Planning and Trust Law
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San Fernando Valley Probate & Estate Administration Law Blog

Detailing a trustee’s duty of accounting to beneficiaries

One of the main advantages that many often cite when extolling the benefits of trusts is the privacy that they afford. Woodland Hills residents can place estate property and assets in trusts without having them become a matter of public record. According to the American Bar Association, one can even protect the identities of his or her beneficiaries through a trust. All he or she must do is have their estates pass into trusts via their wills. Yet the privacy protections offered to a trust settlor and his or her beneficiaries may not necessarily extend to a trustee.

There is good reason for this, as the trustee has a duty of care that he or she owes to beneficiaries. Many may be under the assumption that such an accounting of trust matters is only required when it is specifically requested. However, according to the California Probate Code, trust updates must be provided to beneficiaries at least annually, as well as when a change of trustees occurs and when the trust terminates. A trust accounting should include the following information:

  •          All receipts and disbursements of principal and income.  
  •          All of the trust’s assets and liabilities.
  •          A record of the trustee’s compensation.
  •          The compensation of any agents hired by the trustee.
  •          Statements informing beneficiaries of their rights to petition the court for a review of the trustee’s actions or to make claims for breach of trust.

Detailing the duty to submit an estate inventory and appraisal

Those who come to us here at The Law Offices of Alice A. Salvo after having been named as the personal representative for the estate of a deceased acquaintance in Woodland Hills consider such an appointment to be quite an honor. However, if you have been asked to fill such a role, you should understand that there are a great number of responsibilities that come with it. If your experience in estate law is limited, then it may benefit you to research what your expected duties are immediately after learning of your appointment. This is because the law requires a certain immediate action of you: the submission of an inventory and appraisal of the estate’s assets.

According to the California Probate Code, your inventory and appraisal shall list all of the items included in an estate along with their current fair market value. Such an assessment should be done by a qualified appraiser. Often, the court can be resource in helping you find individuals or parties to perform this service. Your inventory and appraisal shall be submitted as one document to the court within four months after being informed of this responsibility. If you fail to meet this time frame, interested parties to the estate may petition that you be removed from your role as personal representative, and that you repay any fees associated with your inaction as well as their petition.

Do you want to risk a court-appointed conservatorship?

When an individual becomes unable to make necessary life decisions on his or her own, that person likely needs someone in a position to make those decisions for him or her. Of course, you would likely want to have someone you trust and who acts responsibly to have that power. However, unless you plan accordingly, a judge could appoint a conservator to act on your behalf.

Dispute arises between siblings over amendment to father’s estate

When preparing estate planning documents, it may be vital that Woodland Hills residents keep all of those that may be interested parties to their estates involved in the process. That may help to eliminate the chance for disputes between heirs and beneficiaries once those people are gone. Yet even with apparently open channels of communication, disagreements may arise if and when those impacted by amendments to documents such as wills or trusts are informed of those changes.

Such a change is at the center of a dispute between a brother and sister over their late father’s estate. The man, known for his philanthropic work throughout Missouri, passed away last summer. His daughter is now alleging that her brother influenced her father to name him as the sole beneficiary to his fortune. She claims that in 2014, her brother approached their father claiming that she was struggling with debt, and that any assets that were left to her would inevitably be seized by creditors. That assertion, she claims, was enough to prompt her father to amend a trust he had previously established that named the sister as well as her two half siblings as his beneficiaries. The woman claims that it was anger about not being named as a beneficiary in that original trust that prompted her brother to take this action.

Avoiding wealth depletion from generation to generation

Like many residents of Woodland Hills, you work hard throughout your life with the intention that your family will enjoy the fruits of your labors even after you are gone. When many come to see us here at The Law Offices of Alice A. Salvo for assistance with estate planning, their thoughts are often centered on the well-being of their children. Yet what about their grandchildren? Or their grandchildren? If you accumulate extensive wealth throughout your life, you may reasonably expect to able to provide financial security for many future generations of your family. That may only be possible, however, if you do it right.

Without considering some form of tax avoidance, your wealth could be considerably reduced by the time that it reaches your third of fourth generations. As your taxable assets pass from generation, each pays the estate tax rate. Assume you leave a $10 million estate to your children. Whatever amount is above the estate tax threshold ($5.49 million for 2017 according to Forbes Magazine) is subject to a 40 percent estate tax rate. Given the amount in excess is $4.52 million, your tax bill would be $1.804 million, lowering the total amount they receive to $8.196 million. If that is the amount they pass to your grandchildren, the estate tax bill to be paid would be $1.0824 million. This would continue down the line.

Determining when a trustee may be liable for a breach of trust

When a settlor entrusts a trustee to manage assets for the benefit of designated beneficiaries in Woodland Hills, that person is placing a great deal of faith in the trustee’s abilities to accomplish his or her aims. Oftentimes, the person or party chosen as the trustee may not be up to the task. The question then becomes whether or not his or her shortcomings constitute a breach of trust.

The Legal Information Institute of the Cornell University Law School defines a breach of trust as being any trustee action that violate the terms of a trust. It goes on to say that such actions do not always have to be intentional; one’s negligence or carelessness may also constitute a violation of his or her duties.

What is a trustee’s standard of care?

When you are party to a trust in Woodland Hills, you no doubt have interest in the actions of the trustee. His or her performance in this role could directly affect your interest in the trust’s assets. Therefore, it may be in your best interest to know the basic standards that he or she is required by law to abide by if the question of a potential breach of his or her fiduciary duty were to ever come up.

A trustee’s basic standard of care is detailed in the California Probate Code. It states that the trustee must perform his or her administrative duties with the same care and skill as would be expected from a prudent person performing in a similar capacity. Additionally, all of his or her actions should be executed with same purpose in mind: accomplishing the purposes and goals of the trust.

Dispute arises over estate decisions made by late woman’s sisters

Few in Woodland Hills may want to have to consider the potential for their deaths at a young age. They may maintain the belief that there will be plenty of time to address such issues when they are older. However, such a line of thinking may prove to be flawed given that no one has any control over the circumstances of his or her death. Should someone without having properly addressed the affairs of his or her estate die, his or her family members or friends may petition the court to be granted special authority over certain aspects of it. That authority, however, is typically limited, both in its scope and its duration.

Such was the case following the death of a woman in 2010 who operated a restaurant in California. Her sisters were named special administrators to her estate following her death and granted authority to continue the restaurant’s operations, which they did for a short time. Action was later brought against them by the property’s owner in 2011 for unpaid rent, which the sister’s agreed to resolve. However, after another administrator was subsequently appointed to oversee the estate, he filed a petition stating that sisters did not have the authority to link the estate to the terms of their earlier settlement. The issue has since been resolved between the administrator and the landlord.

Wills and trusts: Which is right for you?

An estate plan is essential for every individual, regardless of his or her income or financial standing. If you have not taken this important step, you are risking the appropriate administration of your estate, and your loved ones may not receive their intended share of money and assets.

Estate planning differs on a case-by-case basis. You need a plan that is uniquely suited for your needs, wishes and the value and size of your California estate. A will is the most basic component of any estate plan, but you may also benefit from the establishment of a trust. There are distinct differences between the two, and understanding them can help you make the best decision for you and your loved ones.

Late singer’s manager sued for violating non-disclosure agreement

One of the main reasons why residents of Woodland Hills are encouraged to see to their estate planning before it is too late is because if they want to keep their families’ secrets private, proper planning allows them to do so. Avoiding probate may also mean avoiding having the information related to an estate becoming public record. Even further, provisions such as non-disclosure agreements may secure a family’s privacy by compelling parties to an estate to not divulge information about it. If those parties violate those agreements, the estate may then choose to pursue legal action.

Such action was recently sought by the estate of a late Hispanic singer in order to secure injunctive relief from one of the woman’s former associates. The defendant, who served as the singer’s manager, is alleged to have written a book about the woman that revealed secrets that estate representatives claim he agreed not to share by signing a non-disclosure agreement shortly after her death. That book will serve as the basis from an upcoming television special to be aired by Univision. While a California judge recently issued a temporary restraining order along with a preliminary injunction against the defendant, the series will still air as planned.