Legal Question in Wills and Trusts in California
Trust Assets Mingled With Trustee's Personal Assets
Our father appointed one sibling as trustee and all siblings, including the trustee, as beneficiaries. Shortly before dad died, the trustee (who was also the primary caretaker) used the trust assets to renovate her own property so dad would have a place to live, as well as a few additional upgrades & repairs to her property not related to caring for dad. Now that dad is gone, she is promising that we will all receive our share of the trust when she sells her home (which she has no immediate plans to do). She considers this an ''investment'' of the trust funds, as we will all share in the increased value of the home when it is sold. (As she lives somewhat beyond her means, it is questionable that she will ever have the means to share any profits, assuming any are realized.)
What remedy to the rest of us have? Is there a time limit for us to act? Your advice would be very much appreciated.
3 Answers from Attorneys
Re: Trust Assets Mingled With Trustee's Personal Assets
I agree with the previous two answers. Furthermore, the terms of the trust normally grant the powers of the trustee, and instructs them on how to terminate the trust after death. You need to seek professional help, especially if you think she will continue to borrow money against her home.
Re: Trust Assets Mingled With Trustee's Personal Assets
This is not a good situation. Her fidicuiary duty prohibits her from placing herself into conflict of interest situations. Based on what you have told me so far, I would consider seeking to have her removed as successor trustee. As for timing, you should do it sooner rather than later. Assuming that she was acting under a living trust, you have 120 days from the date she sends out a notice of administration. If I were you, however, I would not delay.
Re: Trust Assets Mingled With Trustee's Personal Assets
Investment my ass. This is another case of an individual stupidly dealing with assets, over which she has a fiduciary duty, improperly and negatively. If she wants to play the game she has to know the rules. Problem is she is a relative. Family, which to me means that there is a difference between she and a total stranger. I don't know whether or not you want to sit down to Thanksgiving dinner as a family in the future. What you need to do is personally, face-to-face, discussed this with an attorney who is an expert in estate planning/trusts. This is not an easy situation because of the relationships but the same time she has improperly used your father's funds for her own benefit. There was a definite conflict of interest there and now, there's a problem which has many alternatives in the attempts to solve.i have been practicing law in this speciality for over 30 years in the san francisco bay area and if you wish to consult with me you can contact me at 925-945-6000.
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