Articles Posted in Actual Client Stories


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Trust terminology basics

A trust is created by a written  document  known as a declaration of trust, and is then funded by transfer of money  into  trust bank accounts and/or deeding or transferring of properties to the  trust.   The creator of the trust is known as the “Trustor” or the “Settlor.”

Trusts are usually prepared by attorneys because each trust is custom for the situation and there are many types of trusts.  The persons who are to receive money and property out of the trust are known as the “Beneficiaries.” The person or institution that takes care of the money and property  of  the  trust is the “trustee”.  The trustee is bound by law to follow the  directions contained in the declaration of trust.

You can predetermine “Reasonable Trustee Fees” – if only you are properly advised

A typical part of any living trust is a paragraph allowing payment of “reasonable” trustees fees. Most people establishing trusts do not realize that there is a great deal of latitude in what reasonable trustees fees are.

Trustee Fees Should be pre-established

Commercial trust companies typically will pay themselves 1 to 2% of the principal as trustees fees. Thus, a trust containing $1 million of assets could have $20,000 of trustees fees assessed against it. If the trust beneficiaries do not agree with the trustees fees they can always file a lawsuit with the probate court claiming that these are excessive but that is often an uphill battle. It is far better off to have set standards as to payment of an hourly rate or a fixed amount for the trustees fees.

If there is a family business involved in the trust, the principal amount of the trust can often be very large, in the millions, which gives a justification for higher trustees fees.

Letting Some of the Kids Live in Mom’s House May Lead to Costly Litigation

Frequently we run across situations where parents will leave their residences to one or more of their children in their will or their trust. If they only have one child then the situation is usually okay but when there are multiple children and some are living in the house and some are not there can be problems. Allowing some children to live in Mom’s house messes up the other sibling’s inheritance.

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The Back Story

We were recently able to successfully solve a situation like this that had gone to court. The mom had died and left her house in a trust to her three adult children but it turned out that one of her adult children and his family resided in the house for many years. However the trust involved was not properly drawn up and only the adult child residing in the house had a copy of it. Then the adult child residing in the house met an untimely death and the other two adult children wanted to have the house sold. The three adult children had an informal arrangement among themselves as to who is going to pay the various household expenses, taxes, repairs and insurance. However, there were numerous accounting issues and arguments about who owed what to whom and the surviving spouse of the adult child who died filed a lawsuit with her version of what her husband was owed from the others.

The Surviving Spouse Had Listed The Home to Be Sold

Image of Orange County Home For Sale with Real Estate SignMeanwhile, prior to the filing of a lawsuit, the surviving spouse had signed a real estate listing agreement with a licensed broker to sell the house. The broker found a qualified buyer and wanted to close on the house sale. However, the title of the house was tied up with a notice of pending action because of the lawsuit filed by the surviving spouse. If the house sale did not close, all three of the adult children would have been liable for brokerage commissions, attorneys fees and further damages.

Doctor Ran Off with his Nurse  =  Lifetime Chase

Image of Doctor and nurseWe handled a case that spread across decades. It started out uncomplicated as we were the attorneys for a conservator who was handling the affairs of his distant cousin. The conservatee, Linda, was formerly Dr. Smith’s nurse. Linda had married Dr. Smith who apparently had a prior marriage and at least one daughter, but Dr. Smith had died many years ago and left his new wife, Linda, about $500,000 to live on.

The conservatee, Linda, became incompetent so a conservatorship was established to handle her money. We had been filing normal conservatorship accounting reports with the court every two years to prove how her money was being spent. When she passed away last year she had about $50,000 of the original $500,000 left and we had to determine how do distribute the estate and to whom.

Found a way to avoid Costly Probate  –  BUT…

We discovered a little-known section of the probate code which allows a summary distribution of conservatorship assets without having to do a full probate. However, we still had to determine who her heirs were and if she had a will telling who was to get what portion of her estate. The conservator lived in the Midwest and he was able to locate an old will but not the original. For probate purposes, generally an original will is needed and statements of witnesses to prove authenticity. Here, we discovered that the attorney who prepared the will was in another state but he was deceased and all the witnesses were deceased. We were able to locate the 6 relatives mentioned in the will and got them to sign papers to prove the will’s authenticity.

Older Affluent Man – New Wife & Step Mother – Man’s Kids Lose!

We recently handled an unfortunate situation where a mature man who was quite successful and had a lot of assets including several companies married a younger woman. He was only married a couple of years when he unfortunately contracted cancer which turned out to be fatal.

Wanting to Take Care of New Wife, Inadvertently Cuts Own Kids from Inheritance

Wife Passes Away in Middle of Divorce  =  Messy Litigation

We handled a probate court case involving a lady named Susan who died while in the middle of a divorce. She had an expensive ocean view house and lots of valuable furniture and jewelry. At first, nobody could figure out who owned what because Sue’s husband had moved out and filed for divorce. He was claiming in the divorce proceedings that he was owed a lot of money from Sue’s estate and Sue’s divorce attorney was making counter claims back against him because of the huge and lavish debts that he ran up buying fancy clothes in Los Angeles.

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Where to Start?!

We first had to get an executor appointed by the probate court to represent Susan’s estate. Next, we had to go into the divorce court to get the executor appointed as the personal representative in the divorce case.

Sue Had a never-finished Living Trust! OMG…

Sue's Will was found but Probate necessaryUnfortunately, Sue never got around to transferring the multi-million dollar estate into her living trust so a probate was necessary to give the executor authority to sell the house. Fortunately, Sue did leave a will which said everything should go into her trust so the point of the probate was to eventually move the house sale money into the trust. However, the trust was written up when Sue and her husband were friendly and together and was drawn up to benefit the husband’s kids. Also, her husband was named as the successor trustee in the trust. What a mess!