Estate of Giraldin (California Supreme Court, December 20, 2012, Case No. S197694)
Estate of Giraldin is an important case which broadens the ability of beneficiaries to sue trustees for breach of trustee duty with respect to a revocable trust, and should be read carefully for the reasoning of the Court as that reasoning might also be applicable in other different situations.
Trustor created the William A. Giraldin Trust in February 2002. The trust was revocable. William was entitled to the benefits of the trust during his lifetime. William appointed one of his sons, Timothy, trustee. Timothy served as trustee from 2002 until William’s death in 2005 and thereafter. Following William’s death Mary his wife was entitled to the benefits of the trust during her lifetime. Following Mary’s death nine children would share equally in the remainder. Following William’s death four of William’s children sued Timothy for his breaches of duty as trustee during the time that William was alive and the trust was revocable. The primary issue on appeal was whether the four beneficiaries had standing to sue Timothy for alleged breach of trustee duty that occurred while William was alive and the trust was revocable.
The California Supreme Court held that the four beneficiaries have standing to sue the trustee for his alleged breaches of trustee duty that the trustee owed to William during William’s lifetime. The opinion offers a detailed discussion about beneficiary standing, and appears to hold that a beneficiary’s standing is broader than might have been thought. For example, it could be argued that the beneficiaries lacked standing because they were only contingent beneficiaries of the revocable trust with no right or entitlement to the benefits of the trust or of an accounting at the time that the alleged breaches occurred. It also could be argued that the beneficiaries lacked standing post William’s death and that only a representative of William’s estate held that standing. However, the Court’s decision could be read to hold that a trust beneficiary including a contingent beneficiary may have standing to bring suit with respect to matters involving the administration of the trust unless the Probate Code or case law specifically holds otherwise. Accordingly, the holding in Estate of Giraldin his important not only for the facts of the case, but potentially also for other trust, trustee and non-trust and trustee Probate Code related situations.