Course 8 — Lesson 1 The Facts for California Failed Trust Terms

[Music] Welcome to the beneficiary's corner this course addresses the trustees failure to follow the trust terms especially when they are required to create sub trust after the death of the set lor let's start with a basic understanding of the trust law we will apply to this problem under Probate Code section 16000 every trustee must administer the trust according to the trust instrument that means the trustee must take all actions required of them by the trust document and by trust law 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 follow the trust terms after the hypothetical we will discuss trust terms in more detail in 2001 Rene and Phil created a joint trust at the time their estate was worth three million dollars and they were worried about the surviving spouse having to pay federal estate tax upon the other spouses death under the trust once the first of Rene and Phil passes away the trust assets are divided into two equal shares one share is to be funded into a survivors trust which remains a revocable trust and is held for the benefit of the surviving spouse the other share is to be funded into a bypass trust which is an irrevocable trust the bypass trust is held to benefit the surviving spouse during their lifetime and then the remaining assets pass to the children equally Rene has no children but phil has two children from a prior marriage Danielle and Jamey in 2015 Phil dies and Renee takes over as a sole successor trustee of their joint trust unfortunately Rene does not seek the advice of an attorney and she is not aware that the survivors trust and the bypass trust have to be created after Phil's death instead Rene keeps administering the trust assets for her own benefit as if nothing has changed over the next year Danielle and Jamie begin to wonder what has become of their father's share of the estate so they make multiple inquiries to Rene about it Rene takes offense to these employees and tells both kids to mind their own business Rene refuses to provide copies of the trust to the children and stops returning their calls in February 2016 Rene decides to lead the entire estate to her two sisters Betty and Linda instead of the children Rene meets a lawyer who drafts a simple trust amendment changing the beneficiaries of the trust from the children to Betty and Linda in August 2016 Renee dies and Betty takes over a successor trustee of the trust Betty reads the trust amendment and believes that she and her sister Linda are the sole beneficiaries when Danielle and Jamie asked for a copy of the trust document Betty provides them with a copy of the trust and the trust amendment Danielle and Jamie consult a lawyer the lawyer notices that Renee was supposed to create a bypass trust after Phil's death but she failed to do so since the bypass trust was supposed to be irrevocable Renee had no power to amend that part of the trust it now appears that Renee has ignored her duties as trustee and failed to create and fund the bypass trust what can Danielle and Jamie do to obtain their fair share of the trust estate here are the options option number one contest amendment file a trust context position challenging the validity of the trust amendment option number two petition for instructions file a petition for instructions to enforce the terms of the bypass trust option number three financial elder abuse file for financial elder abuse against Betty Renee's sister option number four creditors claim file a creditors claim with Renee's estate for one-half of the value of the trust option number five letter writing hire a lawyer to write a letter to Betty asking that she distribute one-half of the trust estate to Danielle and Jamie [Music] you.