Legal Question in Wills and Trusts in California
My grandfather's trust specified that my parents act as custodian for my trust funds until I'm 25. Can the Trustee (claiming discretion) keep my money in his (business) attorney's client fund to earn interest for his atty, and CPA and Atty fees every time a distribution is made? The atty claims my interest will go to some pro bono fund instead of me. This is definitely not what my investment-conscious grandfather wanted.
The trust clearly says the parents are to be custodians. Yes, it does give him discretion and immunity etc elsewhere in the Trust. But the Trustee is 2600 miles away from me and doesn't know one single thing about me, while my responsible, trustworthy parents are in the same house with me paying all my bills. I'm 21 and on my last semester of college. I believe his decision to hold my funds is due to a family tiff, and that he has no legitimate basis to do something other than what my grandfather specified.
What can I do about this, for example, can I assign my benefit to my parents?
The trust says:
"...a beneficiary may, by an instrument in writing filed with the Trustee, renounce or assign all or any part of his interest herein in favor of the beneficiary or beneficiaries entitled to succeed to his interest upon its termination in accordance with the provisions hereof.�
Or is there some other way to get around him using my funds to enrich his atty instead of me? I don�t intend to spend my funds on foolish bills I haven�t incurred like the other �child� who is getting all of his money handed to him. So I expect my fund to earn the best interest available, not Your question has more to do with Attorney Client Trust Accounts. There are two (2) types of Attorney Client Trust Accounts: IOLTA (Interest on Lawyer's Trust Accounts) and a standard trust account. In an IOLTA account, the bank collects interest on the deposits and forwards them to the California State Bar every month. That money is used to fund legal aid programs.
When a client gives an attorney a nominal amount of money, or the attorney will be holding the client's money for a "short period of time," then that money must be placed in an IOLTA account. (Bus. & Prof. Code, sect. 6211.) The rule of thumb for determining whether client funds must be placed in an IOLTA account is that a client's money is considered a "nominal amount" or held "for a short period of time" if the cost of opening and maintaining a separate account is greater than the amount of interest the money would earn.
An attorney acting for a trustee is not investing trust funds (meaning funds from an intervivos or testamentary trust, as opposed to the actual trust account) by placing a large sum of money in an IOLTA account. You don't state how much money is involved, but it sounds as though the money is not earning any interest for you at all.
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