I am a Trust Beneficiary – Can I Sue the Trustee under a Living Trust in California?

I am a Trust Beneficiary – Can I Sue the Trustee under a Living Trust in California?  

​By Attorney Paul Hanks, Ironclad Living Trusts  

There are many possible legal grounds in California to challenge the actions, failings and omissions of a trustee under a Revocable Living Trust. The beneficiaries under a California living trust have extensive rights, including the very powerful ability to initiate a legal action against the successor trustee.

The successor trustee under a California living trust should always be under the close scrutiny of the trust beneficiaries. Many trust beneficiaries are surprised to learn that they have very extensive rights under a California living trust.

It all begins with the extensive obligations imposed on a successor trustee in California. The law imposes on the successor trustees a special fiduciary relationship that mandates that the trustee act with the very highest degree of trust, prudence, and good faith.  The successor trustee must keep the trust settlors’ property separate and distinct from the successor trustee’s own assets. The successor trustee must maintain a meticulous and detailed accounting and record of receipts, payments, and transactions that are undertaken. The successor trustee must maintain an inventory of all assets of the estate. The successor trustee must be protective of assets of the estate, fully insure trust assets, and safeguard the privacy of confidential information. The successor trustee must act diligently without undue delay while at all times adhering to all their responsibilities as the trustee. In the event a trustee breaches any of these responsibilities, the trustee can be held responsible in a court of law.

Has the successor trustee failed to provide an accounting to the trust beneficiaries, or submitted a questionable or incomplete accounting? California Probate Code section 16062 requires the trustee to provide an accounting at least annually, upon the termination of the trust, and upon a change of trustee.

What should a trustee’s account consist of in California? California Probate Code section 16063 requires that the trustee’s accounting contain all of the following information:

(1) A statement of receipts and disbursements of principal and income that have occurred during the last complete fiscal year of the trust or since the last account.

(2) A statement of the assets and liabilities of the trust as of the end of the last complete fiscal year of the trust or as of the end of the period covered by the account.

(3) The trustee’s compensation for the last complete fiscal year of the trust or since the last account.

(4) The agents hired by the trustee, their relationship to the trustee, if any, and their compensation, for the last complete fiscal year of the trust or since the last account.

(5) A statement that the recipient of the account may petition the court pursuant to Section 17200 to obtain a court review of the account and of the acts of the trustee.

(6) A statement that claims against the trustee for breach of trust may not be made after the expiration of three years from the date the beneficiary receives an account or report disclosing facts giving rise to the claim.

If the trustee under a California living trust fails to furnish an accounting, or submits an incomplete or inaccurate accounting, or fails to support the accounting with documentation reflecting asset values, any beneficiary may petition the Court to compel a proper accounting under California Probate Code section 17200.  

Has the trustee submitted an inventory to the trust beneficiaries? California Probate Code section 16006 imposes the obligation on the trustee to “take reasonable steps under the circumstances to take and keep control of and to preserve the trust property”. Additionally, the trustee must prepare an inventory consisting of a complete, itemized list of all assets, to include the fair market value for each asset as of the date of death.

Has the successor trustee failed to provide a complete copy of the trust to the trust beneficiaries? If a trust has become irrevocable, California Probate Code section 16060.7 mandates, upon the request of a beneficiary, that “the trustee shall provide the terms of the trust to the beneficiary”.

Has the successor trustee failed to provide a written notice to the beneficiaries of their right to object to the trust? California Probate Code section 16061.7 requires that, when a revocable trust or any portion thereof becomes irrevocable because of the death of one or more of the settlors of the trust, the trustee shall serve a notification which sets forth the following information:

(1) The identity of the settlor or settlors of the trust and the date of execution of the trust instrument.

​(2) The name, address, and telephone number of each trustee of the trust.

​(3) The address of the physical location where the principal place of administration of the trust is located.

​(4) Any additional information that may be expressly required by the terms of the trust instrument.

​(5) A notification that the recipient beneficiary is entitled, upon reasonable request to the trustee, to receive from the trustee a true and complete copy of the terms of the trust. If this notification is served because a revocable trust or any portion of it has become irrevocable as the result of the death of one or more settlors of the trust, this notice shall also specifically inform the beneficiary as follows: “You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later.”

Has the successor trustee failed to keep the trust beneficiaries reasonably informed of the status of all matters relating to administration of the trust?

California Probate Code section 16060 requires that the “trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.” Additionally, Probate Code section 16061 provides that, upon “reasonable request by a beneficiary, the trustee shall report to the beneficiary by providing requested information to the beneficiary relating to the administration of the trust relevant to the beneficiary’s interest.”

To fulfill these statutory obligations under Sections16060 and 16061, the trustee must keep the trust beneficiaries updated with regard to the nature and extent of assets of the estate and the trustee’s management, protection, accounting, and ultimately distribution of those assets. The trustee must disclose to the trust beneficiaries all obligations and debts of the estate and any liens against trust assets.

As the reader now knows from this Blog, the successor trustee under a California living trust has very extensive duties and obligations owed to the trust beneficiaries. If the trustee is remiss in the performance of their duties and obligations, California Probate Code section 17200(a) permits any beneficiary of the trust to file a petition in Court against the trustee with regard to the internal affairs of the trust.

In summary, the beneficiaries under a California living trust have powerful rights, and should not delay in enforcing their rights. An experienced living trust and estates law firm should be consulted if a beneficiary feels that their rights under a California living trust have been violated.

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