Attorney Fees in Living Trust Litigation:
Always object to the other side’s attorney fees from the very beginning. Send pre-litigation letters to your trustees telling them to mitigate attorney fees. Then when you draft your petition for breach of trust and breach of fiduciary duty also ask the court to disallow the other side’s attorney fees being paid out of trust funds. Make dishonest trustees pay their own attorney fees. Attorney fees must be congruent with the size of the trust. Don’t let living trust attorneys deplete your beneficial share of your living trust. Take all necessary precautions by objecting in writing every step of the litigation process.
Don’t listen to any verbal assurances from probate attorneys that they are not going to totally deplete your family living trust in unconscionable and outrageous fees. Living trust litigation attorneys will tell you to your face that they are going to sell trust real estate to put cash in our pocket as a beneficiary, and then turn around and say they need the $30,000 in proceeds for fees to hire a real estate salesperson to assign the work to.
“Attorney fees deriving from probate court litigation are subject to concerns sufficiently unique, we believe, to distinguish them from fees generated in ordinary civil litigation.” Hollaway v. Edwards (1998) 68 Cal.App.4th 94, 97 [successful defense of allegations against trustee benefited trust by eliminating questions regarding whether the trustee had properly administered trust]
This is Part One is my new blog series on Attorney Fees in Living Trust Litigation. It is my intention to become an expert on living trust litigation in general and and attorney fees in particular. Because probate courts have wide powers and responsibilities to preserve trusts under their supervision, they should make clear the basis for attorney fee awards and thereby facilitate meaningful appellate review. “All too often this responsibility [to supervise trusts] is abdicated by granting whatever fees are sought in the petition.” Estate of Nazro (1971) 15 Cal.App.3d 218, 223 [trustee sought excessive compensation for attorney services].
Attorney Fees in Probate Court
Probate courts have a special responsibility to ensure that fee awards are reasonable, given their supervisory responsibilities over trusts. “Presented with a section 17200 petition to settle an account, ‘the probate court has a duty imposed by law to inquire into the prudence of the trustee’s administration.’ Trustees have a duty “to administer the trust solely in the interest of the beneficiaries.” (Prob.Code, § 16002. subd. (a); see Schwartz v. Labow (2008) 164 Cal.App.4th 417 (Schwartz ) [trustee imprudently spent $1.3 million in trust funds to obtain partially collectible judgment of $700,000].) If litigation is necessary for the preservation of the trust, the trustee is entitled to reimbursement for his or her expenditures from the trust; however, if the litigation is specifically for the benefit of the trustee, the trustee must bear his or her own costs incurred, and is not entitled to reimbursement from the trust.