Course 10 — Lesson 1: The Facts for Trustee Treating Beneficiaries Unfairly

[Music] In this course we will discuss a Trustees failure to treat beneficiaries fairly especially where the trustee is also a trust beneficiary we start with a basic understanding of the Trust's law that applies this Parliament the trustee has a duty to administer the trust solely in the interest of the beneficiaries under California Probate Code section 16003 if a trust has two or more beneficiaries the trustee has a duty to deal in partially with them let's consider a hypothetical situation to demonstrate the problems that arise and the options you have when confronted with the California trustee who fails to treat you fairly as a trust beneficiary after the hypothetical we will discuss trust diversification and more detail in 1995 Juanita and Rodolfo created a revocable living trust and transferred their home a rental property and their financial accounts into the trust Juanita and Rodolfo have four children who were named as equal beneficiaries under the trust in 2001 Rodolfo had a severe stroke Juanita could not care for Rodolfo alone so their daughter Lupe moved into their home to help care for her father Rodolfo died in 2004 Lupe continued to live in the family home rent-free with Juanita until Juanita's death in 2012 Lupe took care of her mother during the last several years of Juanita's life as Juanita's health slowly failed upon Juanita's death the total estate was worth 1.25 million the family home was worth two hundred and fifty thousand dollars the rental property was with $200,000 in the financial accounts had eight hundred thousand worth of cash stocks and bonds after Juanita died her son Miguel took over as sole trustee of the trust the four equal beneficiaries of the trust are Miguel and Lupe along with their two brothers Carlos and Damian Miguel was not happy that Lupe was allowed to live in the family home for so long without paying rent he believed that Lupe should have to pay back rent to the trust Lupe however has no job because she has been a full-time caregiver to her parents for many years Lupe would like to keep the family home and continue living there Lupe are used the her share of the trust estate after all trust expenses are paid is worth at least thousand dollars so she should be able to keep the family home worth two hundred and fifty thousand dollars as part of her trust distribution while the trustee could distribute the home to Lupe Miguel refuses to do so because he also would like to keep the home and live in it himself Miguel immediately starts eviction proceedings against Lupe to force her to move from the home Lupe tells Miguel that she would need a cash distribution from the trust to at least rent a new place to move out Miguel refuses to distribute any cash to Lupe until Lupe agrees to let Miguel have the house Lupe then offers to move into the rental property if Miguel will distribute that house to her as part of her trust share Miguel refuses to do so because the rental home is under a long-term lease with the existing tenant and Miguel wants to keep the rental to produce income for the indefinite future currently there is enough cash on hand to pay Carlos and Damian their share of the trust estate in cash Carlos and Damian demand a cash distribution immediately they believe that the fight over the real properties is none of their concern and they should not have to wait to get paid just because Lupe Miguel cannot get along it appears that Miguel is not treating the trust beneficiaries and partially Miguel is refusing to separate his fiduciary duties as trustee from his personal desire to retain the trust real estate what can Lupe do to obtain her fair share of the trust estate and prevent Miguel from demanding background from her here are the options option number one petition for instructions file a petition for instructions asking the court to order a distribution of the home to Lupe option number two petition for accounting file a petition asking the court to order Miguel to prepare and file a trust accounting option number three petition for removal file a petition to remove Miguel as trustee option number four petition for damages file a petition for breach of trust seeking damages against Miguel option number five petitioned to sell real estate file a petition for instructions asking the court to order the trustee to sell all trust assets and distribute the cash to the beneficiaries equally [Music] [Applause] you.