Establishing a trust is an appealing part of comprehensive estate planning for many Indio, California residents. Creating a trust isn’t a simple legal manner, and using the services of an experienced Indio estate planning lawyer is important for properly assembling an airtight trust agreement. Even the best-constructed trusts can fall victim to mismanagement, and when that happens, you’ll want a talented and knowledgeable Indio trust litigation attorney on your side.
Types of Trusts
Trusts create a new legal entity that takes ownership and management of finances, real estate, and other assets. Most trusts can be grouped into two main categories depending on their level of flexibility. Revocable trusts can be altered by the grantor or may be canceled altogether if the goals or financial circumstances of the grantor change. Irrevocable trusts can’t be altered by the grantor or anyone else once they are executed. Most revocable trusts become irrevocable when the trustor dies.
Additional types of trusts permitted in California include:
Asset protection. An indebted trustor may place assets in a trust to protect against creditors.
Charitable. A trust that benefits a non-profit organization fulfills philanthropic purposes while also easing the grantor’s tax liability.
Constructive. A court can impose a trust where one was implied to exist, or some form of unethical behavior wrongs the beneficiary of the trust.
Special needs. This form of trust allows for a person with special needs to receive an inheritance without a negative impact on their Social Security benefits.
Spendthrift. Like an asset protection trust, this trust is used to protect assets from a beneficiary’s creditors.
Testamentary. These trusts are created by a will and go into effect after the grantor’s death.
No matter the form of trust in question, the importance of a qualified trust litigation attorney with knowledge of the applicable California laws is immeasurable. The proper establishment of the trust at the outset and the selection of a trustworthy trustee is just the beginning. There is no statute of limitations that provides blanket coverage of all trust-related matters, so litigation could be a possibility even in the years after a trust seems completely settled.
Trustor, Trustee, and Beneficiary Relationship
There are three roles in any established trust, and one person can hold more than one role. The trustor is the party that establishes the trust. A trustee manages the trust and sees to it that the terms of the trust are followed and the proper assets are received by the beneficiary at the proper time. The beneficiary is the recipient of the assets held by the trust.
The trustor can administer their own trust as a trustee while they are still alive, and a trustor can also be the beneficiary of their own trust. Many trustors establish themselves as the trustee of their assets until they pass away, at which time a designated replacement trustee takes over.
What Actions by a Trustee May Necessitate Litigation?
A beneficiary who realizes the fiduciary responsibilities of a trustee have been breached has standing to sue in an Indio probate court. The dispute must be leveled by someone with legal standing to bring a probate law case against the trust and its trustee, and that most often means a beneficiary who stands to lose out on financial benefits if the trustee has cheated the trust.
When it comes to estate planning, picking a trustee who will faithfully execute the terms of a trust is essential. Once litigation becomes necessary, it can become a prolonged process and very expensive.
Some of the potential indicators of an unfaithful trustee include:
The trustee allowing their personal finances to intermingle with the funds of the trust. Clear records should always be maintained to keep the line brightly defined between estate funds and the personal finances of the trustee. Beneficiaries are within their rights to request the trust’s financial records and examine them with legal counsel.
A conflict of interest exists or develops that calls into question the objectivity of the trustee and their ability to properly uphold fiduciary responsibility. A trustee should not borrow money from the trust or take personal benefits from any of the assets.
A trustee enabling a co-trustee or not taking action to prevent the co-trustee from committing a breach of trust is also untrustworthy.
In addition to a breach of trust, the trustee can also be pursued legally if they commit a breach of contract. Failure to properly distribute assets or act in the best interests of the beneficiaries is grounds for legal action. Trust litigation allows the beneficiary who has been wronged to see damages from the trustee in probate court.
Possible Litigation Penalties for a Trustee in Indio, CA
An Indio trustee facing a suit from a beneficiary may use funds from the trust to fund their defense. This comes with the likelihood that a loss will lead to restitution being ordered. The plaintiff could receive damages and order full payment to be made back to the trust for legal fees.
The court can also remove a trustee breaching either their trust or their contract. Criminal charges also aren’t out of the question for a trustee whose conduct rises to the level of fraud or embezzlement.
Trustees should protect themselves with thorough and accurate record keeping, preserving clarity around their role and responsibilities, maintaining open communication with the beneficiaries, and getting help from qualified lawyers or accountants if necessary. Just as a beneficiary needs to find experienced Indio legal counsel to improve their odds of successfully winning in litigation, a trustee facing a suit should get a specialized trust attorney to protect themselves.
Benefits of Trusts Over Estates
Estates are administered as a one-time transfer of assets carried out after the death of the party whose estate is in question. Trusts allow the trustor to bequeath assets to their heirs over time, before and after death. This method allows for significant discounts over California and federal estate taxes.
Estates only become active posthumously. Trusts give the trustor greater power to divvy up their assets prior to death.
Litigation may be pursued if a legal will refers to property in an estate that has been placed in a trust. The trust is its own legal entity, so the assets it is holding are not subject to the terms of the will.
Hire an Expert Lawyer For Estate Planning Services Today
An Indio trust litigation attorney with the experience and specialization to handle the complexities of estate planning and probate court cases is an important resource. The team at Bochnewich Law Offices has years of experience navigating these tough areas of law. If you or a loved one needs assistance with trust or estate establishment or execution, contact us to schedule a consultation.
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