Right to Be Treated Impartially

Emily recently came to me, utterly distraught. Her mother had passed away six months prior, leaving a trust that named Emily and her brother, David, as co-trustees. Everything seemed straightforward initially, but David began making unilateral decisions about selling trust property – specifically, a rental house that had been in the family for generations – without consulting Emily. When Emily voiced her objections, David dismissed her concerns, stating he was “handling things” and that Emily didn’t understand the market. The situation escalated rapidly, leaving Emily feeling powerless and financially vulnerable, and ultimately costing her a significant income stream.

As a California estate planning attorney and CPA with over 35 years of experience, I see situations like Emily’s far too often. The core issue isn’t necessarily David’s bad intentions, but rather the fact that he appears to be operating without fulfilling his fiduciary duties as a trustee. Too many co-trustees believe they can act independently, particularly when they have a strong personality or perceived expertise, which is a dangerous misconception under California law.

What are a Trustee’s Duties to Co-Trustees?

A trustee, whether sole or co-trustee, has a legal obligation to administer the trust according to its terms for the benefit of the beneficiaries. But when multiple trustees are involved, this duty extends to actively collaborating with your fellow trustees. Probate Code § 16060 & § 16062 establishes an affirmative duty for trustees to keep beneficiaries “reasonably informed” about trust administration, and most trusts require regular accountings. However, this principle of transparency applies equally between co-trustees.

This means a co-trustee cannot unilaterally make significant decisions like selling assets, changing investment strategies, or modifying distributions without a good faith effort to discuss and obtain agreement from the other trustees. Reasonable communication is paramount. Documenting those communications – even a simple email confirming a phone call and the topics discussed – can be invaluable if disputes arise.

What happens if a co-trustee is not cooperating?

When a co-trustee refuses to communicate or actively obstructs the trust administration, the situation can become legally complex. Simply put, a co-trustee cannot “freeze out” another. If David continues to act unilaterally despite Emily’s objections, she has several options. First, she can send a formal written demand requesting an accounting and explanation for the sale of the rental property. If David still refuses, Emily can file a petition with the probate court to compel the accounting and potentially surcharge David for any losses resulting from his improper actions.

The court can then order David to provide a full accounting of trust finances and to justify his decisions. More importantly, the court has the power to remove a trustee who is found to be acting in breach of their fiduciary duties. The standard isn’t necessarily proof of theft, but rather “hostility or lack of cooperation” (Probate Code § 15642) that impairs the administration of the trust.

Can I force the sale of trust property if a co-trustee won’t agree?

This is a more complicated question. Generally, a trustee cannot sell trust property without the consent of all trustees, or a court order. However, there are exceptions. If the trust document explicitly grants a trustee the sole authority to sell assets, that provision will govern. But even in those cases, the trustee must still act prudently and in the best interests of the beneficiaries.

If the trust is silent on the matter, Emily would likely need to file a petition with the court requesting permission to sell the property. The court will consider several factors, including the terms of the trust, the best interests of the beneficiaries, and the financial implications of the sale. As a CPA, I can help assess those financial implications, including the step-up in basis upon the mother’s death and any potential capital gains taxes associated with the sale. Understanding these tax consequences is crucial for making informed decisions about trust assets. Ignoring these elements can lead to significant, unnecessary tax burdens.

How do enforcement rules in California probate court shape outcomes for heirs and fiduciaries?

Success in probate court depends less on the size of the estate and more on the accuracy of the petition and the behavior of the fiduciary. Whether the issue is a forgotten asset, a contested creditor claim, or a disagreement among siblings, understanding the procedural triggers for court intervention is the best defense against prolonged administration.

To protect against specific family risks, review heir disputes without a will, check for left-out heirs issues, and be vigilant for signs of elder financial abuse.

Ultimately, the difference between a routine distribution and a protracted legal battle often comes down to preparation. By anticipating the demands of the Probate Code and addressing potential friction points with beneficiaries and creditors upfront, fiduciaries can navigate the system with greater confidence and lower liability.

Verified Authority on California Beneficiary Rights

• Statutory Notification Window (The “120-Day Rule”): California Probate Code § 16061.7
  This is the most critical statute for beneficiaries. Once a trustee serves this formal notice, you have exactly 120 days to file a contest. If you miss this deadline, you are generally forever barred from challenging the validity of the trust, regardless of the evidence you have.
• Right to Accounting & Information: California Probate Code § 16060 (Duty to Inform)
  Trustees have a mandatory legal duty to keep beneficiaries “reasonably informed” about the trust and its administration. Under Probate Code § 16062, most trustees must provide a formal financial accounting at least once a year. If they refuse, the court can compel them to do so.
• Inheriting Real Estate (Prop 19): California State Board of Equalization (Prop 19)
  Beneficiaries must understand that inheriting a home no longer guarantees low property taxes. Under Prop 19, to avoid reassessment to current market value, the child must make the home their primary residence within one year of the parent’s death.
• No-Contest Clause Enforceability: California Probate Code § 21311
  Fear of disinheritance often stops beneficiaries from fighting for their rights. However, this statute clarifies that a No-Contest clause is only enforceable if the contest is brought without “probable cause.” If you have a reasonable basis for your claim, your inheritance is likely safe.
• Recovering Trust Assets (Heggstad): California Probate Code § 850 (Heggstad Petition)
  If a beneficiary finds that a parent intended an asset to be in the trust but failed to sign the deed or change the account title, a Section 850 Petition allows the court to “transfer” that asset into the trust without a full probate proceeding.
• Removal of a Bad Trustee: California Probate Code § 15642
  Beneficiaries have the right to petition for the removal of a trustee who is unfit. Grounds for removal include excessive compensation, inability to manage finances, or “excessive hostility” toward beneficiaries that interferes with the trust’s administration.