BE CAREFUL WHO YOU TRUST WITH YOUR TRUST
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.
Trusts are not supervised by the court system and are not registered with the state government upon formation. Trusts are essentially private contracts between the trustors, the trustees and the beneficiaries. There are laws written into the California probate code that control the governance of trust matters. Those laws give people interested in trusts the right to file lawsuits known as “petitions” in the probate court. Trust petitions fall into several broad categories. One category is that of people attacking the formation of the trust for lack of capacity by the trustor or fraud or undue influence in the signing of the trust. Also in included are disputes over failure to fund the trust and interpretation of the terms and meeting of the trust. The other category is people complaining about the breach of the trust by the trustee for failure to follow the instructions in the trust, failure to account, failure to distribute, wrongful payments to the trustee or others, failure to properly invest in for removal of the trustee.
Trust Petition (lawsuit)
A trust case is started by filing the petition with the probate court, and then the court sets it for an initial hearing about 5 to 6 weeks ahead. By the time of the court hearing, the persons being sued, typically the trustee of the trust, must file a written response with the court or at least show up at the court hearing to state that he/she is contesting the petition. Trust petitions typically take a year or more to get decided, if they are contested by the people being sued. Because the courts are overcrowded and because there is a lot of paperwork filed with the court and exchanged back and forth among the disputing parties. I have handled many interesting cases involving trust cases and some are described here.