Whether you know you are someone’s heir or are a beneficiary of a trust, knowing your rights to the property you are meant to inherit is important. California’s Probate Code offers certain protection to those meant to inherit property from a decedent. In the case of the trust where the property is being handled by a third person or trustee prior to being distributed, if you suspect you have an interest in the property you can force the turnover of those documents to confirm your interest.
What is a trust?
A trust allows for property to be transferred less directly than by an immediate hand off. In a trust a person hold property for the benefit of another person. (Higgins v. Higgins (2017) 11 Cal.App.5th 648, 662.) The settlor gives the property to the trustee who will then administer the trust or distribute the property for the benefit of the beneficiary. When real property is put into a trust, the trustee holds the legal title to the property, not the trust. (Boshernitsan v. Bach (2021 61 Cal.App.5th 883, 888.)
Trust property can be distributed during the settlor’s lifetime or after death based on the type of trust. (Cal. Prob. Code § 15401.) The trustor can modify, terminate, or revoke the trust before their death, which makes the trust revocable before their death. Alternatively, a trustor’s will may create a trust called a testamentary trust. This means the will will go through the probate process and the court will determine its validity before the property is passed to the trustee to administer it. (Wells Fargo Bank & Union Trust Co. v. Superior Court (1948) 32 Cal.2d 1, 8.)
The trustor or settlor can also choose how the assets are distributed. If the trustor does not give specific instructions, the trustee has the power to decide how the property in the trust is distributed. (Cal. Prob. Code § 16246.)
What duties does a trustee owe in distributing the trust property?
A trustee owes a duty of loyalty to beneficiaries. This means they cannot engage in self-dealing or administer the trust for their own benefit. (Copley v. Copley (1981) 126 Cal.App.3d 248, 278-279.) This means, they must adhere to the trust instrument or document which created the trust and states the trustor’s intent.
A trust gives a trustee a fiduciary duty to the beneficiaries. (Hearst v. Ganzi (2006) 145 Cal.App.4th 1195, 1208.) This means if there is a suit in relation to the property in the trust, the trustee is the one sued, not the trust. (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 521.) A trustee must give notice to beneficiaries when a trust is being administered and if it becomes irrevocable. (Cal. Prob. Code. § 16061.7.) A trustee must also account to each beneficiary at least once a year, when the trust terminates, or if the trustee changes. (Cal. Prob. Code § 16062, subd. (a).)
If a trustee disagrees with the need for accounting or disagrees with a beneficiary about the intent in the trust instrument, the trustee’s interest is automatically presumed to be adverse. (Donkin v. Donkin (2020) 47 Cal.App.5th 469, 473-474.)
What if the trustee is not adhering to their duties?
If a trustee is not adhering to their duties or a beneficiary suspects they are not, the beneficiary can take certain actions. A beneficiary has the right to inspect any of the trustee’s records regarding their interest in the property. (Strauss v. Superior Court In and For Los Angeles County (1950) 36 Cal.2d 396, 401-402.) A beneficiary can also ask for an account of all transactions, like all disbursements from a trust. (Purdy v. Johnson (1917) 174 Cal. 521, 527.)
If the beneficiary is worried about how the trustee is administering the trust, they can bring a claim for trustee misconduct. (Triplett v. Williams (1969) 269 Cal.App.2d 135, 137-138.) This applies to the trustee’s duties of loyalty or fiduciary duties.
What if you want to see the trust documents?
As an heir you are entitled to request the turnover of these documents pursuant to California’s Probate Code section 16061.5 and 16061.7. These sections require a trustee to provide a true and complete copy of the terms of the irrevocable trust to “any beneficiary of the trust who requests it, and to any heir of a deceased settlor who requests it.” As an heir you are allowed to request this when a revocable trust or any portion of a revocable trust becomes irrevocable because of the death of the settlor or a trustee is appointed upon the death of the settlor. The ability to request trust documents also exists whenever there is a change of trustee of an irrevocable trust.
If a trustee fails to serve the notification required by Probate Code section 16061.7 they “shall be responsible for all damages, attorney's fees, and costs caused by the failure unless the trustee makes a reasonably diligent effort to comply with that section.” (Cal. Prob. Code § 16061.9 (a).) Further, a trustee who fails to serve the notification by trustee as required by Section 16061.7 on an heir who is not a beneficiary and whose identity is known to the trustee shall be responsible for all damages caused to the heir by the failure unless the trustee shows that the trustee made a reasonably diligent effort to comply with that section.” (Cal. Prob. Code § 16061.9 (b).)
What would is an example?
For example, “Julie” is the beneficiary of a trust, “Shawn” is the settlor, and “Tyler” is the trustee.
Shawn could put a property in a trust while he is alive to be held for Julie’s benefit. During Shawn’s lifetime this trust would be revocable. Upon Shawn’s death, the trust would become irrevocable. At this time Tyler would need to give notice to beneficiaries. This means he would give notice to Julie and anyone else who might have an interest in the trust. As trustee, Tyler owes fiduciary duties and duties of loyalty to beneficiaries like Julie. This means if Julie thinks Tyler is not distributing the property in the trust according to Shawn’s intentions, she can force Tyler to show her the trust documents via Probate Code section 16061.7. Under this section she can also collect damages from Tyler if he failed to notify her of the trust becoming irrevocable or refused to give her the trust documents.
Julie might also be able to use this code section against Tyler if he knew she was Shawn’s heir. If Tyler knew, he would need to give her notice of the trust becoming irrevocable at Shawn’s death. If Tyler failed to do so or failed to honor Julie’s requests to see the trust documents, she could collect damages if she was harmed.
Julie could also use this section to request the trust documents if she was Shawn’s heir and thought she might be named in the trust.
Conclusion
California’s Probate Code offers protection to heirs and beneficiaries to a trust. Specifically, it ensures trustees keep beneficiaries and heirs apprised of the changes in the trust. The protections the Probate Code offers also mean you can force the disclosure of trust documents to confirm your interests are being distributed properly. If you are dealing with real property in a trust and are having disputes over interests, partition may be a solution.
At Underwood Law, our partition attorneys can help you navigate your partition action efficiently and with care. We are here to help.
