LA Successor Trustees & Attorney-Client Privilege

Recent Judicial Council of California Court Statistics confirm that Los Angeles probate and mental health court trials total over 14,000 per year. Many of these trials involve beneficiary allegations of wrongdoing against a trustee or battles to remove an existing trustee. So what is the background that sets the stage for trustee disputes in LA?

We start with noting that a living trust becomes irrevocable at the death or incapacity of its maker. New trustees are often appointed when the trust becomes irrevocable or when conflicts arise between a beneficiary and the trustee. Conflicts between former trustees and new or successor trustees often arise when the successor trustee requests some, if not all, documents in the possession of the former trustee or the former trustee’s attorney. A California Court of Appeal recently addressed this issue in Fiduciary Trust International of California v. Klein (2017) 9 Cal. App. 5th 1184 (hereinafter referenced as “Klein”). The lessons of the Klein decision are worth repeating.

So whether a trustee was removed by court order or voluntarily resigned, the attorney-client privilege protects the “client.” Klein makes clear that the client is the office of the trustee rather than the particular trustee. A trustee has the obligation to preserve trust property. Such property includes the trust’s legal files.

The power to assert the confidential communications privilege moves to the successor trustee.  If this were not so the successor trustee would be unable to do his or her job in protecting and preserving trust property. A predecessor trustee should not be allowed to interfere with or prevent the transfer of attorney-client trust files to the new trustee. The very narrow exception to this rule is when a predecessor trustee distinguishes, scrupulously and painstakingly, his or her own interests from those of the beneficiaries of the trust. Moreover, a California Supreme Court case notes that if a predecessor trustee seeks legal advice in his own personal capacity (not in his capacity as a trustee) and pays for the advice out of his own personal funds, he may be able (not shall be able) to avoid disclosing the advice to a successor trustee.

Now trustee succession battles can be brutal. Discovery of legal files and attorney-client communications with the predecessor trustee can be protracted. That said, the Klein case gives guidance and hope to those successor trustees who require the trust’s legal files to protect trust assets and prevent any further harm to trust beneficiaries.

Hackard Law is dedicated to safeguarding the beneficiary rights of Los Angeles clients. If you are facing a problem trustee or other threats to your family’s inheritance, you can call us at 213-357-5200. We look forward to hearing your story and seeing how we can best help you.