Hands TiedCalifornia trust litigation often stems from disagreements and hostility among family member co-trustees.  Rather than picking ane of their kids to serve as sole successor trustee when they dice or become incapacitated, Mom and Dad oft appoint 2 or more of their children to act together as successor co-trustees.

Having more one child serve equally co-trustee can work out well or turn into a nightmare.  In this post we'll discuss the challenges associated with sibling co-trustees and how controversy might be avoided.

The default rule in California is that co-trustees must deed unanimously.

In California, unlike almost states, co-trustees must make administration decisions past unanimous consent.  If there are iii co-trustees, all must consent with respect to the various details of trust assistants, such equally hiring a existent estate agent to listing/sell trust holding or engaging an accountant to produce accountings and tax returns.

Nether California Probate Code section 15620, unanimity applies to co-trustees "unless otherwise provided in the trust musical instrument."  Manor planning attorneys often will insert special language specifically allowing for action by a bulk of co-trustees.  If such diction is not included in the original trust musical instrument or an amendment, section 15620 requires "unanimous action."

Experienced estate planners typically counsel clients about the pitfalls of appointing co-trustees without calculation a majority-rules clause.

What if the co-trustees can't hold?

If co-trustees who are subject to the default rule can't achieve a consensus, whatever of them can file a petition for instructions nether California Probate Code section 17200, asking a judge of the Superior Court to provide directions to the co-trustees.

A co-trustee who petitions for instructions must provide notice of hearing to all co-trustees and all beneficiaries, using Judicial Council Course DE-120.  While a minimum of 30 days' find is required under California Probate Lawmaking department 17203, the notice menses will depend on the availability of hearing dates.

In the probate unit of Sacramento County Superior Court (Section 129), the clerk is setting hearings in trust matters well-nigh 90 days out from the date of filing.  If there is genuine urgency with respect to a petition, even so, the court may take it upwardly on an ex parte (shortened fourth dimension) ground, with notice given by x:00 a.thou. on the courtroom day prior to the hearing.  (See our prior postal service for a discussion of ex parte procedures in California probate courts.)

A petition for instructions by one co-trustee may spark objections and cross-petitions by other co-trustees, and beneficiaries who are not co-trustees may join in the fray.  If there is an objection, the court typically will set the matter over for farther hearings.  The parties will take time to appoint in discovery, including interrogatories, document requests and depositions.  Ultimately, under California Probate Code section 1022, if a compromise cannot be reached, the court may concur an evidentiary hearing (bench trial) on the petition(south) and objection(south).

Tin can each co-trustee appoint his or her own attorney?

A trust is non a legal entity, only rather a fiduciary relationship where one or more trustees holds property for the benefit of certain beneficiaries.  Hence, a lawyer does not represent "the trust" but instead represents one or more co-trustees to guide them with respect to trust administration.  Many California lawyers are unfamiliar with this distinction every bit are most family unit member trustees.

While co-trustees often share legal counsel, each co-trustee has the selection of engaging his or her own chaser to stand for him or her in a co-trustee capacity.  In fact, where co-trustees are in substantial disagreement, an attorney or law business firm may be unable to represent (or go along to correspond) them all given the ethical rules that require attorneys to avert conflicts of interest in the absenteeism of informed consent by the affected clients.

The separate legal representation of co-trustees can heighten complications over and higher up an increment in assistants costs.  Co-trustees may decline to provide funding for 1 some other'due south legal counsel, forcing each co-trustee to either (1) advance legal expenses and seek reimbursement, or (2) ask the court on the forepart end to approve the engagement and payment of counsel.

Co-trustees may condition payment or reimbursement of legal expenses on the production of detailed billing invoices, simply counsel may be reluctant to reveal information regarding their work product such as the bug they accept researched or the witnesses they have interviewed.

In a strained environment, co-trustees are likely to accuse each other of spending too much on lawyers or having lawyers advance their personal interests as opposed to representing them in their fiduciary capacities.

Past the time co-trustees go divide counsel, communications often will have broken downwardly to the extent that the co-trustees are no longer able or willing to collaborate informally in trust administration.  The lawyers then play an increasing office in attempting to move forward, at substantial expense to the trust.

Can a co-trustee only melody out and let the others handle things?

A co-trustee may lack interest or time to participate in trust administration, or may seek to avoid conflict past taking a passive approach and letting the others do all the work.

Such a passive approach, however, is perilous to the co-trustee.  Under California Probate Code section 16013, each co-trustee has an independent duty to participate in administration of the trust.  Each co-trustee must take reasonable steps to preclude a co-trustee from committing a breach of trust or to compel a co-trustee to redress a breach of trust.

So, for example, if Co-Trustee Albert sells a ranch belongings held in trust to a friend for less than fair marketplace value, and Co-Trustee Betty goes along with the sale without asking any questions, Betty can exist held liable for breach of trust.

Accordingly, a co-trustee who wants nix to do with trust assistants more often than not should decline to serve or resign, as opposed to dozing in the wheelhouse.

What will a California judge practise when faced with acrimony amid co-trustees?

Nether California Probate Lawmaking department 15642, if hostility or lack of cooperation amidst family member co-trustees impairs trust administration to the detriment of the beneficiaries, the court can terminate the gridlock past removing all of the co-trustees and appointing a tertiary party to serve as sole successor trustee.  The tertiary party may be a depository financial institution trust section or a private professional fiduciary licensed past the California Department of Consumer Affairs.

Often one co-trustee volition petition the court to remove the "problem" co-trustee.  The court, if persuaded that one sibling indeed is having a damaging effect on trust assistants, may grant such a petition.  But judges volition approach such requests with skepticism.  For i thing, information technology may not be piece of cake to sort the good trustee from the bad i.  Also, judges generally requite deference to Mom and Dad's pick of the siblings as co-trustees and will be reluctant to remove ane sibling while leaving the others to rule the roost.

What'southward the takeaway?

Parents should think long and difficult earlier appointing their siblings to serve together as successor co-trustees.  While majority rules provisions can help resolve disagreements without a trip to the courthouse, they besides tin result in the marginalization of a co-trustee with valid concerns.  Parents who anticipate conflict should consider naming a third party to serve as successor trustee.  The fees charged past such a third party may be much less than the expenses incurred by sibling co-trustees who squabble over trust administration, and the third party may be able to complete administration much faster than siblings who don't meet center to centre.