New California case expands shifting trust/trustee attorneys’ fees and costs to a beneficiary’s share of the trust

New California trust dispute decision expands shifting trust/trustee attorneys’ fees and costs to a beneficiary’s share of the trust – Pizarro v. Reynoso, California Court of Appeal, Third Appellate District, Case No. C077594, (March 28, 2017)

Summary. The decision in Pizarro v. Reynoso expands the shifting of trust/trustee attorneys’ fees and costs to a beneficiary’s trust share, and in relevant part reminds us that all trust and estate litigation cases vary and are determined in significant part by the facts and circumstances of that case, the relevant case law, and the discretion of the trial court judge. In Pizarro v. Reynoso, on appeal the Court of Appeal held as follows:

  1. The terms and intent of the trustor prevail in substance – refusing to elevate form over substance the court upheld a sale of the trust real property to a specific beneficiary which the trust authorized in the trustee’s discretion if the beneficiary could afford to purchase the house. The trustee in fact in part assisted the beneficiary in that purchase so that the beneficiary could purchase the property – never the less the court upheld the sale based on substance over form and the intent and terms of the trust.
  2. Under the court’s equitable powers, the attorneys’ fees and costs incurred by the trust/trustee are chargeable against the trust share of a beneficiary who brings an unfounded proceeding against the trust, but those attorneys’ fees and costs cannot be awarded against the beneficiaries other personal non-trust assets, citing Rudnick v. Rudnick (2009) 179 Cal. App. 4th 1328, 1332-1333, 1335, and Estate of Ivey (1994) 22 Cal. App. 4th 873, 877-878, 882-886.
  3. Important – in an expansion of #2 above and charging fees and costs to a beneficiary’s trust share, under those same equitable powers, the court also can award the trust/trustee attorneys’ fees and costs against the trust share of a beneficiary who has not filed or brought a proceed, but who takes an unfounded position and litigates in bad faith causing the trust to incur fees and costs (the beneficiary changed her position to being against the trustee, and in the trial court’s opinion then offered false testimony by declaration, deposition and at trial – offering false evidence in litigation is a bad faith litigation tactic).
  4. The court’s decision also cites or makes reference to California Probate Code §17211(a) and §15642(d), which state as follows (and I have also provided below §17211(b):

17211(a)

(a) If a beneficiary contests the trustee’s account and the court determines that the contest was without reasonable cause and in bad faith, the court may award against the contestant the compensation and costs of the trustee and other expenses and costs of litigation, including attorney’s fees, incurred to defend the account. The amount awarded shall be a charge against any interest of the beneficiary in the trust. The contestant shall be personally liable for any amount that remains unsatisfied.

(b) If a beneficiary contests the trustee’s account and the court determines that the trustee’s opposition to the contest was without reasonable cause and in bad faith, the court may award the contestant the costs of the contestant and other expenses and costs of litigation, including attorney’s fees, incurred to contest the account. The amount awarded shall be a charge against the compensation or other interest of the trustee in the trust. The trustee shall be personally liable and on the bond, if any, for any amount that remains unsatisfied.

15642(d)

(d) If the court finds that the petition for removal of the trustee was filed in bad faith and that removal would be contrary to the settlor’s intent, the court may order that the person or persons seeking the removal of the trustee bear all or any part of the costs of the proceeding, including reasonable attorney’s fees.

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Everyday is elder abuse prevention day – video cartoon – please pass it along

Here’s a different presentation approach – please do pass it along to your contacts and people who would be interested. This is an important topic that needs more discussion. Thank you. Dave Tate, Esq. (San Francisco and California)

Trustee and Beneficiary Responsibilities and Rights – Discussion Paper

If you are a trustee you need to know your responsibilities, and if you are a beneficiary you should know your rights. The following is a summary paper discussing both the responsibilities and the rights. Of course the California Probate Code is considerably longer and more detailed than the points discussed in this paper, there are also case law interpretations, and every case and situation is unique, but the paper will give you good insight. Click on the following link for the paper and discussion, A Summary of California Trustee and Beneficiary Responsibilities and Rights Dave Tate Esq 01052016.

Dave Tate, Esq., San Francisco

What Is A California Conservatorship – An Overview

I was initially going to make this discussion as a video, and I still might; however, the video obviously takes more time. Below is the discussion about California conservatorships – specifically, what is a California conservatorship, an overview.

First – a reminder and an obligatory disclaimer – this discussion is only a summary of a complicated topic. You need to consult with an attorney about your situation. You cannot rely on this discussion for your situation. And this is not a solicitation for services inside or outside of California, I only represent clients in California, I don’t know anything about your situation or case, and you have not hired me for your situation or case.

Now, that having been said, the following is an overview discussion about California conservatorships.

A conservatorship is a court proceeding where the court legally appoints someone to make and manage personal, medical, daily living, residential placement, or financial matters and decisions for another person.

The person whose rights are being taken away or limited is called the conservatee. The person who is being appointed to manage matters and make decisions for the conservatee is called the conservator.

A conservatorship is a serious legal proceeding because the court, which is a state governmental entity, is being petitioned to take away or limit some of the prospective conservatee’s freedoms and personal and constitutional rights.

The conservatee has the right to fight or oppose the conservatorship, who might be appointed, and the powers of the conservator. And a prospective conservatee has the right to a jury trial.

You might ask, when is a conservatorship needed? Typically a conservatorship might be needed when a person can no longer make and manage the personal, medical or financial matters and decisions for herself or himself, and she or he hasn’t legally appointed someone else to handle those matters and decisions.

So, for example, a conservatorship might be needed if there are no, or insufficient, power of attorney and trust documents, and the person no longer has the mental capacity to execute those documents or refuses to do so.

On the other hand, a conservatorship should not be granted if there is a less restrictive way to provide the help or assistance that is needed, and if the court grants the petition for conservatorship, the court can order only the least restrictive terms, conditions and limitations that are necessary under the circumstances.

The person who is petitioning for conservatorship has the burden of producing sufficient admissible evidence to establish that the court should grant the conservatorship. Conservatorship proceedings can be very contentious.

If a conservatorship is granted, the case remains with the court for future review of the actions taken or not taken by the conservator, accountings if the conservatorship is of the estate, and whether the conservatorship is still needed.

Often a conservator is required to make very important and serious decisions. The conservatee and other people can oppose or object to what the conservator is going to do or has done. Sometimes the case will go back to court for the court to make decisions or orders.

The conservator needs to be represented by an attorney. The conservatee will be represented by an attorney if the conservatee requests one. And in conservatorship disputes it is common for other family members or friends to also be represented by legal counsel.

Recent California conservatorship court decisions have dealt with conservatee’s rights including the right to a jury trial, and in a very recent case the appellate court overruled the trial court, holding that the conservatorship should not have been granted because a friend had instead offered to provide the help and assistance that the prospective conservatee needed.

I have already explained that a prospective conservatee has the right to oppose the conservatorship, and to a jury trial.

You should also be aware that if the conservatorship is granted, the conservatee might also continue to disagree with decisions and actions that are being made or taken.

And I have also seen situations where the preexisting relationship between the conservatee and the conservator was forever damaged, and situations where the prospective conservatee, or the actual conservatee if the conservatorship was granted, then sought to disinherit the person who petitioned for conservatorship or who was appointed by the court to serving as the conservator.

There are many provisions in the California Probate Code that discuss conservatorship proceedings and duties and rights. There are too many provisions to cover in these materials. However, generally you can look at Probate Code sections 1400 through 3212. Other Probate Code sections are also applicable.

In addition to the conservatee’s rights, I also find particularly interesting and important the provisions that relate to conservator duties and decision making, including how the conservator should go about making decisions and what to consider, possibly including the wishes of the conservatee.

You can find additional information on my blogs at http://californiaestatetrust.com and http://auditcommitteeupdate.com, and you can call me at (415) 917-4030. That’s all for now. Thanks for reading.

Dave Tate, Esq., San Francisco and California

Attorney in Fact and Power of Attorney Decision Making

Surprisingly, there is very little statutory or case law discussing:

-Attorney in fact decision making under a power of attorney document;

-When the power of attorney becomes effective;

-If the principal is making the decisions;

-When is the named attorney in fact actually acting as an attorney in fact under the power of attorney;

-Is the attorney in fact a fiduciary, and if he or she is actually acting as a fiduciary, for what is he or she a fiduciary;

-Can someone be acting as a fiduciary in some situations or with respect to some issues and decisions, but at the same time not for other situations, issues and decisions (and related, the principal doesn’t necessarily lose decision making over all situations, issues and decisions, right?); and

-The specifics of whether acting as a fiduciary in a particular situation does or does not switch the burden of proof, and if it does, in what manner, to what extent, and for what events or actions is the burden of proof switched?

These are all important issues, and they are becoming more important. Cases that deal with powers of attorney or even these issues usually don’t go into detail, but many times simply find in a conclusory fashion that someone was a fiduciary so for all purposes and for all events or actions the burden of proof is shifted, and all depending on the judgment of the trier of fact which is often a single judge. I submit that this approach is way to simplistic, conclusory and lacking in critical legal analysis.

The California Probate Code provides that agency law applies to power of attorney, attorney in fact, and principal issues, unless the Probate Code contains a provision that states otherwise or that directly addresses the issue at hand. I very seldom hear discussions in court about statutes that address powers of attorney, or actions and responsibilities and decision making thereunder. The following are a couple of those statutes.

California Probate Code Section 4234 – (a) To the extent reasonably practicable under the circumstances, an attorney-in-fact has a duty to keep in regular contact with the principal, to communicate with the principal, and to follow the instructions of the principal.

California Probate Code Section 4657 – A patient is presumed to have the capacity to make a health care decision, to give or revoke an advance health care directive, and to designate or disqualify a surrogate. This presumption is a presumption affecting the burden of proof.

California Probate Code Section 4684 – An agent shall make a health care decision in accordance with the principal’s individual health care instructions, if any, and other wishes to the extent known to the agent. Otherwise, the agent shall make the decision in accordance with the agent’s determination of the principal’s best interest. In determining the principal’s best interest, the agent shall consider the principal’s personal values to the extent known to the agent.

As you can see, the attorney in fact, assuming that he or she is in fact acting under the power of attorney and as an attorney in fact for the specific situation, issue or action at hand, should be communicating with the principal about important issues and the principal’s wishes and decisions with respect to those issues. And there is or might be an actual or implied presumption that the principal has decision making capacity and is making the decision in that circumstance.

Dave Tate, Esq., San Francisco and throughout California, http://californiaestatetrust.com

 

Conservatorship Should Not Have Been Granted Where “Friend” Offered To Provide Help – Conservatorship of Jesse G.

I have attached below a pdf of this new California Appellate Court decision in which the Appellate Court overruled a trial court order granting a LPS conservatorship. I have attached the pdf of the entire decision because the decision is lengthy in its discussion of the facts, and only by reading the decision will you get a feel for how difficult it might be to establish that a conservatorship should be granted. And you should read other prior blog posts by me discussing conservatorship issues, including the rights of the prospective conservatee. Also note in my prior posts the crossover that there can be between the legal authorities that relate to LPS conservatorships and general probate court conservatorships. Thus, although Conservatorship of Jesse G. is a LPS conservatorship, the reasoning of the Court, and some or perhaps even most of the legal authorities cited, might also equally apply in a general probate court conservatorship proceeding.

As you read the decision in Conservatorship of Jesse G., note the facts that could arguably suggest that the prospective conservatee might need help, and arguably that the conservatorship could be granted. The Appellate Court (similar to the trial court) also notes that the case is a close call. Also note that it isn’t certain that the help or assistance that the friend offered to provide to the prospective conservatee will be sufficient, or that it will be lasting over time. And yet, the Appellate Court concludes that under the circumstances of the case, the granting of the conservatorship was not legally justified. And some of the reasons why the Court reached that decision have to do with the burden of proof that is required, and that preference to less restrictive measures must be given.

Here is a link to a pdf of the decision Conservatorship of Jesse G. – discussing evidence that a LPS conservatorship should not have been granted

Dave Tate, Esq., San Francisco Bay Area and throughout California.

Loss for Someone with Dementia

The following is a link to a post from Stephanie Peters’ blog titled “Loss for Someone with Dementia.” It is good for me to step back from the day-to-day legal involvement and reflect on the human aspects. And I note Stephanie’s comments about talking, or not, to someone with dementia about the loss of a spouse or other loved one. Here’s the link to Stephanie’s post, CLICK HERE.

Loss for Someone with Dementia