Do California licensed fiduciaries put you first?
They should. This is what the law says. This is what makers of trusts think when they name a stranger as the fiduciary of their trust.
But it doesn’t always work, does it? An example:
A multimillionaire, the father of two, is dying. He is in and out of the hospital. He is on heavy medications. He wants to set up a trust to benefit his only two children.
He meets with an estate planning attorney. The meetings are at his home. He hires the estate planner. The father tells the estate planner that he wants to take care of his children, both in their 50s.
The estate planner creates a HEMS trust – a trust designed to provide for the health, education, maintenance and welfare of his children. He tells the estate planner that he wants his children to be good citizens. At this point both of his children are essentially disabled.
The estate planner makes absolutely no inquiry as to the current health, education, maintenance and support of the children. The estate planner sets up a 50-page plus trust. The estate planner includes wishful language that his children become good citizens.
The estate planner suggests his friend, a licensed California fiduciary, as the trustee to take over when the father dies. The father meets with the proposed trustee once or twice. The father cannot read the trust line by line. He is too sick. Still, he signs the trust.
The father dies. He leaves about $6 million in the trust. At the time that he dies, his two children are living in his house. The children meet with the successor trustee.
The successor trustee says that she might distribute about $24,000 per year to each of them. The successor trustee will assess the trust for her fees – often .75% to 1% per year – about $45,000 to $60,000 per year. The successor trustee starts eviction proceedings against the father’s children about 30 days after he dies. The successor trustee’s excuse – she has to garner trust assets.
The trust says that the trustee can retain the house. The settlor didn’t set up a trust to benefit a for profit professional trustee that he met once or twice. He set up the trust for his children. Now the successor trustee is acting like a very stern drill instructor.
A multimillionaire estate’s assets will go to pay her fees and a trickle of it will go to the father’s beneficiaries. From the trustee’s actions to date you would think that the trust says:
I would like a California licensed fiduciary that I met once or twice to be the primary beneficiary of my estate. I want her to treat my two disabled children like they lack dignity and really shouldn’t be benefitting from any of my estate. I want the fiduciary to kick the children out of my house as soon as she can after I die. I want her to intimidate them and to provide as little transparency as possible. Moreover, it is my preference that the licensed fiduciary spend money on attorney’s fees rather than to benefit my children. And, I think that she has full discretion to mistreat my children in any fashion that she desires – the HEMS reference is just really a joke – one that shouldn’t be taken seriously.
Of course, this isn’t what the trust says. It is how the trustee is acting. At Hackard Law we work to assist abused beneficiaries against trustees who are ignoring or rejecting their duties. Call us today at 916-313-3030.