Trustees assume many duties. Some wanted - some unwanted. Some pleasurable - some painful. Evicting beneficiaries out of trust property is among the most painful duties. The target of the eviction is usually a beneficiary living with their parent at the time of their parent's death.
Or, a beneficiary who moves into the trust property after the parents are deceased. If that beneficiary also happens to be a co-trustee of the trust that now owns the home, the task becomes even more difficult.
So, how does this happen? It happens over the control of the family home - usually the most valuable trust asset. The home is often in the name of the parent's living or revocable trust. The parent is the trustee while alive.
For these purposes, let's assume that the parent is a widow. She is the mother of four living children. She names two of her four children as successor co-trustees of her trust. These two are to assume the obligations and responsibilities of the trustee at their mother's death.
One of the co-trustees is living with her mother. Mother dies. The two children become co-trustees. The co-trustee who is living in the home will not vacate it. She is one of four beneficiaries - all equal under the terms of the trust.
The other beneficiaries are her sister, also a co-trustee, and her two brothers. The co-trustee will not pay rent. She will not cooperate in the sale of the house. All other beneficiaries want the house sold and the proceeds divided equally.
Everyone is at an impasse. What can be done? Co-trustees exercising their power must act unanimously "unless otherwise provided in the trust instrument." And there certainly is not unanimity here.
Both trustees have a duty to take control of and to preserve the trust property. There is also the duty to make the trust property productive. The co-trustee living in the property is hindering the control, preservation and productivity of the property.
That co-trustee is violating her duty of loyalty to the trust's beneficiaries. She is not dealing impartially with them. She is preferring her own economic benefits over those of her siblings. So, can she be evicted?
Not without first getting a probate court's intervention. While a probate court is empowered to remove one co-trustee, it is a difficult challenge. California's Probate Code Section 15642 provides in part that a "trustee may be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a settlor, cotrustee, or beneficiary under Section 17200 ..."where hostility or lack of cooperation among cotrustees impairs the administration of the trust."
Faced with choosing between two siblings, the court might end the gridlock by removing both trustees and appointing a third party to serve as the sole successor trustee. This is a possibility even if all other beneficiaries join together in seeking the removal of the co-trustee living in the trust's home.
California courts regularly appoint professional fiduciaries licensed under the Professional Fiduciaries Act as the sole successor trustee of the trust. So, even assuming that the home-residing co-trustee is removed, the result of an eviction attempt is not crystal clear. Even eviction efforts against layover beneficiaries who are not co-trustees lack certainty of results.
We return to the concept that the trustee is the legal owner of the property. The beneficiaries are the equitable owners. The trustee (or co-trustees) may bring the eviction action, and the beneficiary may oppose it. We've seen cases where the court will uphold the eviction. And we've seen others where a different remedy is encouraged or fashioned.
Maybe the beneficiary can stay a bit longer, pay rent, or pay partial rent with a later offset. Courts will try to be fair. And, we need to remind ourselves that the Probate Court is a court of equity. You don't see real cookie-cutter results in these cases.
Hackard Law represents clients in California estate, trust and elder financial abuse litigation matters. We take significant cases where we think that we can make a substantial difference and there is a wrongdoer who can be made financially accountable for their wrongdoing.
I note that not all cases end in protracted battles. Most cases are actually resolved before trial.
We listen to our clients. Most clients prefer reasonable resolution over financially and emotionally exhausting legal wars.
If you would like to speak with us about your case, call us at Hackard Law (916) 313-3030.