TRUST DISPUTES: When Beneficiaries Object to a Petition for the Sale of Real Property

During our conversations with homeowners who have yet to meet with an estate planner, we advise them to consider the benefits of a trust. We have been quite fortunate to have relatively few issues with probate transactions handled by our agents, but a significant volume of trust-related matters will end up in a dispute settled by the court.

One such case involved a ‘settlor’, Ms. Brown, who established a trust for multiple properties including her primary residence. She appointed longtime friend George Wilson as the successor trustee and his son Michael as the second successor trustee.

The trust was established in 2005 and subsequently amended in 2007 and 2011, with the latter amendment making it irrevocable because an employee of Ms. Brown was pressuring her to change her estate plan to benefit him and she felt she might not be able to resist such pressure in the future. A new trust was later executed in 2011 revoking the 2005 trust.

Ms. Brown filed a voluntary petition for the appointment of a conservator for her estate and person in early 2012, where a party named Mr. Siegal was a named conservator by the court, as well as interim successor trustee in the 2011 trust. Siegal moved Ms. Brown out of her home to an assisted living facility where costs exceeded $4,000.00 per month

Siegal filed a petition to reinstate the 2005 trust and revoke the 2011 trust. The petition was granted by the court; however, Siegal resigned as interim successor trustee in early 2013. George Wilson was unable to carry on as the successor trustee, so his son Michael took over and put two homes and five vacant lots owned by Ms. Brown up for sale.

A neighbor of one of Ms. Brown’s properties, Ms. Fife, began assisting her with errands and cared for several of her cats prior to Ms. Brown going into an assisted living facility. The 2005 trust provided that Ms. Fife would receive specific real property to care for the cats owned by Ms. Brown upon her passing.

The language in the trust also included a provision that the trustee could use funds from the estate as deemed necessary for the care, maintenance and support of Ms. Brown.

Ms. Fife filed a petition in court to prevent the sale of the assets citing an objection that Ms. Brown made it clear the welfare of the cats was important and $50,000.00 should remain in her estate to care for the cats as well as the upkeep of the property where the cats would live.

In late 2013, Michael Wilson filed a response to Ms. Fife’s objection where he cited there was insufficient funds to pay for a caregiver if Ms. Brown moved back into one of the properties and the living expenses of $11,000.00 far exceeded her income of $2,800.00 per month.

Fife argued on the statutory basis of section 21402 subdivision(a)  that the house to be left to her which was named in the trust is considered a ‘specific gift’ to her and should have only been abated after ‘residuary’ gifts had been exhausted.

In early 2014, the court overruled the objections to the sale of the assets and ordered the petition for sale of real property confirmed. Siegal v Fife, B253746M (Cal. Ct app 2015)

Although I am not an attorney, I have worked closely with real estate attorneys for many years.  There have been many cases where a trustee’s power to sell trust properties has come into question but section 16266 is clear in stating a trustee’s authority in these matters.

If you need the assistance of an estate attorney, please feel free to give us a call at (310) 538-6884 or (310) 516-1300

 

Blog by M. A. Williams, Broker

3/11/20