California Beneficiaries Can Sue Trustees Regardless of Rights Vesting

A recent California Supreme Court decision will benefit the beneficiaries of trusts who feel that the trustee has taken actions that harmed their interests. The decision, relating to the case of the Estate of Giraldin, was issued on December 12, 2012. The Court held that beneficiaries do have the right to sue a trustee for acts that occurred prior to the settlor’s death.

What does this mean for trust beneficiaries in San Diego?

The following is an overview:

• When a settlor dies, a trust becomes irrevocable.
• At that time, the rights of the beneficiaries to trust property vest, and the trustee then owes them a fiduciary duty.
• Previously, beneficiaries of a trust in California did not have rights to the trust property or against the trustee until the settlor died.
• With this new decision, beneficiaries can bring an action against a trustee even for actions that occurred prior to the settlor’s death, if the action breached a duty that the trustee owed to the settlor.

How would this play out in daily life?

If a trustee uses trust property for his or her own benefit without the consent or knowledge of the settlor, the trustee has breached a duty to the settlor. As a result, the beneficiaries can now bring an action against the trustee, even though the theft occurred while the settlor was still alive. Before this decision, a trustee could commit acts of theft or otherwise waste trust property while the settlor was still alive, and the beneficiaries would have no recourse.

What should I do next?

If you are the beneficiary of a California trust and think you may need to pursue an action against a trustee, review our article, Starting a California Trust Contest. For additional information, view our free book, Trust and Will Litigation in California. These resources will help you to understand the processes involved with trust litigation. Contact The Grossman Law Firm today for guidance.