A Sad Case For Trust Litigation

P

PR660

Member
Jurisdiction
California
In 2016 was 1/3 beneficiary of a Trust that became 100% liquid due to the selling of a home.

I contacted the Trustee and counsel for Trustee beginning in 2017 on through 2019 about the status of the Trust via numerous emails and certified letters. Nothing.

In mid 2019, I threatened legal recourse and finally received the first Accounting. I objected to many things including exorbitant attorney fees, a bridge loan originated by Trustee at $50,000 expense (under the guise of moving costs for beneficiaries) where Trustee purchased a home, etc.

I was ignored, and before the distribution would take place, I consulted with many and retained counsel in 2019. During a meeting with counsel around 2021, it was said that the Trustee (who continued to rack up attorney fees $$$ on this) was building a "house of cards" that will inevitably tumble and that Trustee was on the "borderline" of being able to meet financial obligations of an eminent defeat. He then mentioned something to the effect of a "lien on her home."

In the Interrogatories (August 2023) which took several FULL days (and nights) to complete by deadline, I had to relive 2015, where my mother, lifelong best-friend, confidant and pastor died AND I suffered injuries in a near fatal car crash. I had an entrepreneurial project, with IP on 5 continents (over $120,00 in expenditure) that was "on-hold" awaiting my distribution of cash in order to commence. In 2017, I made a payment of close to $20,000 to renew some of the IP...

Long story short, my attorney called me yesterday to tell me that we destroyed the Trustee in the deposition and that he was happy that a settlement was eminent. Hooray! He told me that I'd be "whole" and expected recovery of my $80,000 in attorney's fees. He said that the Homestead Exemption prevents Trustee's home from being part of the settlement.
I asked what "whole" meant and he said it was the initial distribution amount in the accounting from back in 2019. Seriously?

So, here I am in 2024, calculating the cost of inflation and the devaluation of the dollar, not including opportunity cost and time value of money, I am at MUCH LESS THAN BREAKEVEN after all these years.

I write so that anyone out there may learn from my experience.

Any thoughts are very much appreciated.
 
1 - Greedy heirs are common.

2 - "Made whole" is a myth.

3 - Frankly, what happened is nobody's fault but the decedent's. All this could have been avoided with proper estate planning and the use of beneficiary accounts and transfer on death deeds. If you have multiple offsprings, think about this when you are planning the eventual distribution of your estate. Don't leave anything "jointly" to anybody because that's what makes the trouble.
 
adjusterjack said:
1 - Greedy heirs are common.

2 - "Made whole" is a myth.

3 - Frankly, what happened is nobody's fault but the decedent's. All this could have been avoided with proper estate planning and the use of beneficiary accounts and transfer on death deeds. If you have multiple offsprings, think about this when you are planning the eventual distribution of your estate. Don't leave anything "jointly" to anybody because that's what makes the trouble.
Click to expand...
Thank you, but I'm not understanding #3. Decedent hired counsel to draft the Trust where her 3 children were equal 1/3 beneficiaries. I was to be the Trustee, but bowed out due to the fact that other beneficiaries had disdain for me. The eldest (and least savvy) sibling was picked.

---The trust doesn't state anything as "jointly."
---Brokerage accounts and life insurance all had "named beneficiaries."
---The only actual assets in the Trust were a home (sold after death) and cash accounts.

Can you please explain #3 when convenient?
 
PR660 said:
Thank you, but I'm not understanding #3. Decedent hired counsel to draft the Trust where her 3 children were equal 1/3 beneficiaries. I was to be the Trustee, but bowed out due to the fact that other beneficiaries had disdain for me. The eldest (and least savvy) sibling was picked.

---The trust doesn't state anything as "jointly."
---Brokerage accounts and life insurance all had "named beneficiaries."
---The only actual assets in the Trust were a home (sold after death) and cash accounts.

Can you please explain #3 when convenient?
Click to expand...

You provided new information here, so "adjusterjack" might change his opinion, but I don't agree that it was the decedent's fault. I'd say that the vaguely described events are partly your fault for stepping down from serving as trustee but mostly the fault of the person who became trustee and that person's lawyer. Stepping down because "other beneficiaries had disdain for" you is the real lesson from which others ought to learn. Everything else in your original post is so vaguely described that it isn't really possible for anyone to learn from it.

By the way...

PR660 said:
So, here I am in 2024, calculating the cost of inflation and the devaluation of the dollar, not including opportunity cost and time value of money, I am at MUCH LESS THAN BREAKEVEN after all these years.
Click to expand...

The highlighted are all basically the same thing.
 
For some reason, I am unable to edit the thread, so I'll add here:

Moral of the story: If I would have known that 5 years later, I would end up with the same sum stated in the initial "crooked" accounting of 2019, I (and an avg intelligence 4th grader) would not have retained counsel and pursued this matter. My intent was to seek what I was legally entitled to and NOT to financially punish the incompetent Trustee.
 
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PR660 said:
Brokerage accounts and life insurance all had "named beneficiaries."
Click to expand...

Wasn't that money immediately distributed to the beneficiaries? It should have been as a beneficiary account belongs to the beneficiary at the moment of death. It's no longer part of the estate. No probate, no trust, no delay.

PR660 said:
The only actual assets in the Trust were a home (sold after death) and cash accounts.
Click to expand...

What were cash accounts doing in the trust whan they had named beneficiaries? Or didn't they have named beneficiaries?

The home was sold right after the death and all that was in the trust was cash?

So why, after a suitable amount of time for paying debts and expenses, wasn't the cash immediately distributed to the three beneficiaries of the trust?
 
adjusterjack said:
1) Wasn't that money immediately distributed to the beneficiaries? It should have been as a beneficiary account belongs to the beneficiary at the moment of death. It's no longer part of the estate. No probate, no trust, no delay.



2) What were cash accounts doing in the trust whan they had named beneficiaries? Or didn't they have named beneficiaries?

3) The home was sold right after the death and all that was in the trust was cash?

4) So why, after a suitable amount of time for paying debts and expenses, wasn't the cash immediately distributed to the three beneficiaries of the trust?
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1) Yes, all brokerage accts and life Ins w/named beneficiaries were distributed relatively immediately after death.

2) There was only decedent's checking account and a savings account upon death, and they were NOT (until this day) distributed.

3) Yes, the home was sold and the above (#2) cash accounts made up the Trust - it was ALL CASH in 2016.

4) That is the question. And I have emails and certified letters asking this from 2017, 2018, and 2019---I got no answers and then I retained counsel in 2019. And here we are 8 years later, (5 years into litigation) and $80,000 OUT OF POCKET LATER...

My counsel says I should be getting my fees back, and the initial corrupt figure, maybe a little more.

Trustee has simply spent too much in attorney fees fighting and covering up her lie (that she will pay for due to surcharge) and due to the Homestead exemption, we can not recover beyond her share - that is, 8 years of potential financial gains and inflation recovery, etc.

RE: the $300,000 Bridge loan (with $50,000 in cost) which was initially distributed to all 3 beneficiaries under the guise of "moving/relocation" (and fat chance a judge would believe that) was later changed to "was also originated to help other beneficiary (me), as he was interested in acquiring the property..."

This also makes no sense as pointed out in the Trustee deposition. Trustee was not able to understand that originating a loan on Trust assets diminished beneficiary's (my) EQUITY in the property... thus having no bearing on the ability to acquire the property. All it did was COST the Trust.

It was discovered that other beneficiary (brother) loaned his share of that distribution to Trustee that went directly into an escrow account for the property she purchased.
 

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