Trust Mishandling | Poor Little Rich Kids

Trust Mishandling | Poor Little Rich Kids

• March 18, 2021 - Abused Beneficiaries, Trust Litigation,

I’m Mike Hackard with Hackard Law. We work at being one of California’s leading estate and trust litigation law firms.

We often represent aggrieved beneficiaries and heirs. From the outside looking in, some of our clients may look like “poor little rich kids.” From the inside, we see that there are plenty of trustees who mishandle trust assets. Assets placed in trust to benefit a wealthy parent’s children at his or her death. I’ll give a few examples.

A wealthy father is dying. He’s unmarried. He has two children. He turns to an estate planner for help. The estate planner introduces him to a licensed California fiduciary. The licensed for-profit fiduciary advertises on her website that she is “compassionate.” He believes her self-proclaimed compassion. He instructs that he wants his children to be taken care of. He dies.

The fiduciary immediately moves to evict one of the children from the family home. She provides no income to the children. She sits on millions of dollars in assets. Her attorney gets paid. She’ll get paid. She makes clear that any costs and attorneys’ fees defending her actions will come from the trust assets. The children – they’re getting nothing until she’s good and ready.

A mother living in one of California’s most exclusive zip codes provides a generous trust for her three children. She names her oldest son by an earlier marriage as the trustee of the trust. The son is to administer the trust for his benefit and for the benefit of his two much younger brothers.

The younger brothers are the children of their mother’s second marriage. Their father died long ago. The mother, long ill, passes away.

The oldest brother, the son that their mother relied on, takes charge of the trust. He is generous with himself and a penny pincher for his brothers. His brothers receive an income that is less than the federal poverty level. The young brothers, growing up in a wealthy family, now live an impoverished life.

A Northern California widow wants to make sure that her daughter is provided for. Her estate planner recommends an out-of-state corporate trust to administer her trust after she dies. She dies.

There are many millions of dollars in the trust. The corporate trustee talks a good game. Their website talks about the corporate fiduciary’s “white glove” service. They provide peace of mind.

They provide a “best-interests” approach to beneficiaries. They provide trusted advice. Only they don’t.

They charge more each year for trust administration than what they provide to the trust beneficiary. Their “independent fiduciary advice” proves to be their own proclaimed independence from the beneficiary’s needs. Annual fees, expected long-term payments for their management, and scant oversight seem to be the real focus of this corporate fiduciary.

The three examples, somewhat modified to protect privacy and attorney-client relationships, capture the problems with errant trustees. They might be family members, for-profit licensed fiduciaries, or corporate fiduciaries. They all share the same or similar obligations to beneficiaries:

• The oldest son, the sole trustee, who is also one of the trust beneficiaries, must administer the trust so that it does not unduly favor himself.
• The licensed individual fiduciary must administer the trust solely in the interest of the beneficiaries.
• The corporate fiduciary must consider the size of the estate, the beneficiary’s condition in life, and the extent of the trustee’s discretion in determining the amount that the trustee should expend for the support of the beneficiary.

We litigated these cases, and many like them. People, whom outsiders might classify as poor little rich kids, have the right to have the trust administered solely in the interest of the beneficiaries. Not for the interest of individual trustees, for-profit licensed fiduciaries, or corporate trustees.

Hackard Law represents aggrieved heirs and beneficiaries throughout California. If you’d like to speak with us about your case, call us at 916 313-3030. We’ll be happy to hear your story.

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