Technology and Online Tools Can Help Executors of Estates While Executor Works With Probate Attorney

Technology is making it easier to save and share information and the probate and estate administration world is no different. Clients can use Excel spreadsheets, Dropbox and other file sharing tools with us and beneficiaries.

The New York Times recently had an article "Online Tools Can Ease the Burden of Being an Executor of an Estate" and it recommended an interesting online database tool called EstateExec that has gotten good reviews. It is an interactive tool that allows an executor to list and track financial assets, personal property, debts and then share it online with a lawyer or other beneficiaries and family members. It also has timelines and checklists (so court hearings for approval can be entered) which provides a transparency to the process which helps others understand why it can take months in the probate court system.

While this does not eliminate the need for a probate attorney in an estate with assets, the will is complex or where there is a likelihood of litigation, it has good checklists and is a useful tracking device. It can also be helpful for very small estates that do not need probate court. 

Part of our practice is focused on using technology where possible to make it easier for our clients. Older clients are not as technology based but things are changing and we can take advantage of all the tools available to us to make probate administration easier and faster. 

Posted by Henry (Hank) Moravec III
Office: 626-793-3210
Email: hm@moravecslaw.com

Who Gets Grandma's Antique China? Do Not Forget the Minor Details and Sentimental Items in Estate Planning.

We have had two cases in the last couple of years where one of the attorneys from our office had to spend days sitting with the disputing relatives in estate cases while they took turns going through personal property and effects of their relative. 

Not only was this emotional for the parties but costly from a legal fee standpoint. The parties required it since without cousel present, it could not be accomplished for a variety of reasons.

A recent New York Times article by finance writer Paul Sullivan, When Dividing Assets the Little Things Matter (4/15/16) gives all of us a reminder and good ideas on how to not overlook the personal items that may not have as much monetary value as cash, real estate, securities but have sentimental value as well as some monetary value. 

When relatives go in and take personal property without agreement between the parties this can be a huge source of future conflict.  Photographs are often important, for example, but with scanning companies this can be taken care of as long as one relative has not taken the albums and refused to cooperate. 

This is something that one can do themselves by making lists, taking photographs or videos, etc. We find, however, that for our senior clients it is often overwhelming for them to do. We can send a paralegal or attorney to your home to assist the process which is then covered by the attorney-client privilege and is part of the estate planning process. This can even be done when parents or grandparents decide to downsize and move to avoid family disputes. 

For the do-it-yourselfers, there is a company FairSplit that has an interesting concept of having licensed insurance adjusters come to your home and take photographs and videos of all items and list them with price based on square footage. This company also has a less expensive online option where you do the listing yourself. 

As attorneys we can incorporate this and monitor it so the parties keep track and it is used for the final reports. With technology, there are a lot of tools that can make this entire process easier and less expensive. Lesson is though not to forget the small details and personal mementos, and get help to get it done. Advance planning and hiring someone is far less expensive than legal fees later and less painful than fractured families later. 

Posted by Henry (Hank) Moravec

Do I Need to Hire a Lawyer in Probate Court?

One common question that we often hear is the following:

"Do I have to hire a lawyer in Probate Court?"

or its close relative:

"Can I represent myself in Probate Court?"

I would note that this question also comes up during Probate Court hearings on a regular basis, because on a typical day, out of about 50 or so matters on the calendar there are bound to be 2 or 3 people representing themselves without lawyers.  Invariably, of the two or three, one or two of them is told by the judge to "seek legal advice."

You would expect a lawyer to say "of course you need to hire a lawyer" but the most accurate answer is that the need depends upon the facts:

1. If you have plenty of time on your hands, and no time pressure with respect to the estate, and no pressure from creditors or heirs, you might be able to represent yourself and have no downside.   Most people consider "wasting time" a downside, hence the first qualification.  A continuance, which is what the Court calls the situation where a matter scheduled for January 31 has to to be rescheduled for March 5 because a document is not properly prepared, causes a delay of the time of the continuance, in this example over 30 days.  So, if it does not matter how long it takes to, for example, take title to property, then the client would not be upset with the delay.  However, if a creditor or another heir wants things concluded, the delay is problematic.

2  So, that leads us to the next generalization:  if time is in any sense of the essence, only by using an experienced probate lawyer can you be confident to minimize delays.   This also applies if the client simply wants to not worry about the matter, because regardless of how long the process takes, the stress factor drops if a lawyer helps with the case.

3. Then, there are the situations in which you absolutely need a lawyer, and as soon as possible: (a) any time there is a party against you.  This is because a mistake you make may result in liability to the other party, be they creditor or heir.  (b) Any time there is a potential tax problem of the decedent.  (c) any time there is a creditor of the decedent which has a claim which may be disputed.

4. Finally, if you do not want the burden of responsibility, you should always hire a lawyer.   If, for example one sibling is nominated to be the administrator, and part of the job is reporting on the administration to the other siblings, use of an experienced probate lawyer greatly increases the odds that the administration will be stress free, since an expert will be available to answer questions.  This factor alone seems like a matter of common sense but is in fact important.  Many "probate disputes" start when the administrator is un-represented and an avoidable mistake is made.

 The Cost May Be Less Than You Think

 Probate fees are significantly less than fees charged by realtors to market and sell property.  Although there are some discount real estate (market your property yourself) brokerages, in the main no one considers the standard 5% commission on a real estate transaction to be out of line, and as a matter of fact considering the amount of people who voluntarily pay it, it is considered very much "in line."  To sell a $1,000,000 house, in a transaction which might take 60 to 90 days, costs $50,000.   To probate a $1,000,000 estate, which might take more than a year, and collect various assets and deal with multiple beneficiaries, and protect yourself as a fiduciary from liability costs a $23,000 statutory fee in Probate Court.   Although there are sometimes other fees and costs for additional work, at a fundamental level in this area legal representation is less expensive that selling a house.

So, it turns out that advice is actually simple.  Save money if you can, but don't be "penny wise and pound foolish."

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

Probate and Trust Administration Top Posts

 The other day I was looking through all the stats on the blog, to see the most popular posts.  In first place is What happens when someone dies without a will?  with 1550 views.  If you liked that one, check the  2013 related post: What happens when someone dies without a will? Does joint tenancy save the day? The rest of the top five posts of all time on the blog are:

2. Recent California Decision On Breach Of Trust & Trustee Fiduciary Duties   with 1010 views.

3. Recent California Decision Highlights Trustee's Breach Of Duties And Misconduct When Trustee Is Also A Beneficiary  with 961 views

4. What Is Undue Influence In California Probate Courts? with 740 views, and 

5. Potential Estate Tax Implications Of J.D. Salinger's Death  with 490 views.

We feel that there is an overall theme developing here, since the most viewed posts are probably connected with what people are searching for on the Internet and what brings them to the blog.  

As a technical matter, the permanent change to a $5,000,000 exemption per person means that for many people, estate taxes are no longer an issue which would drive estate planning.  It is a huge difference to not so long ago when the exemption was only $600,000.

However, family relationships cannot be legislated, and the conflicts which develop after death are very much unaffected by tax laws.  If one child thinks that their sibling unduly influenced Mom, well, that is simply an issue which will always be around.

We see our practice in disputed matters steadily expanding, so these stats are not surprising to us. 

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

What Happens when a Person Dies with an Ambiguous Will?

I have been posting lately on the various issue and challenges raised by probate and trust litigation.  Now, just to be clear, "litigation" means an actual filing in a Court of law.   But what of something that rises to the level of a mere "argument" or maybe a level or two above an argument, perhaps where each person feels they need a lawyer to advise them, but does not actually end up in court?  In other words, a "dispute?"

It is probably fair to predict that for every matter which actually results in litigation in the probate courts, there are some multiple of matters over which there is a dispute which, although it may be serious to the parties, does not (fortunately) result in actual litigation. 

A new matter came into the office the other day which reminded me of law school, where the law professors try to fit all of the possible legal issues into one fact pattern.  This matter had the following facts:

1. The decedent elected to have the most "simple" Will he could get.  I am not sure where he got it, but it only consisted of a couple of pages.  In it, his stepson was given "all the Widgets I own at the time of my death."   There was no list of Widgets either in the Will or set forth otherwise.

2. Of course, the relationship between the stepson and the biological son (who was to get the remainder of the assets) was not good.

3. Like many people do, the decedent made gifts during his lifetime.  One of them was a gift of a relatively valuable Widget #1 to his biological son.  This was actually shipped by the decedent to the biological son, but no written notation of the gift was made.

4.  The decedent also, like many people, talked.  All kidding aside, he also promised one reasonably valuable Widget #2 to his grandson (the son of the biological son).  Although he talked about it with various people, and referred to the Widget as "grandson's Widget" he never actually delivered it to the grandson.  After the decedent's death, biological son shipped this Widget to the grandson.  Like the Widget in paragraph 3 above, there was no written notation.

5. The decedent also had charitable intent.  Shortly before his death he had his biological son contact a charity which ran a Widget museum.  He wanted to donate one valuable and rare Widget #3 to the museum.  There was an email exchange on this topic between the museum and the decedent's biological son about three months before the decedent passed away, but no formal contract.  After the decedent's death the museum accepted the rare Widget.

6.  Last but not least, the decedent of course had a comprehensive set of Widget making and Widget repairing tools and spare parts.  He also was in the process of making a couple of Widgets (which would be #4 and #5 --- of course, the guy was a Widget maker, what would one expect?).   After the decedent died, the biological son, not being a Widget maker, asked the museum if they would like this esoteric set of personal property, the museum said yes.

Now the biological son learns a few things:  the step son basically wants to know why he should not get Widgets 1 through 3, and also that the step son thinks that some of the "materials" were close enough to being completed  "Widgets" that they should have gone to hims as "Widgets 4 and 5" under the Will.

What result?  Well, at the moment there is no court "litigation" on these claims.  Everyone is upset, but how will it work out?

My predictions, which I will expand upon in upcoming posts, are:

Widget #1 stays with biological son.  Widget #2 might have to be returned, depending upon whether the executor can enforce the "oral" gift under local law.  Widget #3 may well come back into the estate, because charities do not like to get a reputation for holding on to property at the expense of heirs.  However, Widget #3 also has a written pledge (the email).  Widgets #4 and #5 probably stay with charity, as the executor can conclude that they are not completed Widgets.

This is exactly the sort of disputes which can be avoided if appropriate time is taken in the drafting of estate planning documents in the first place.  And this avoidance does depend upon having someone with experience advise you when you draft documents.  A good lesson to keep in mind.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The Los Angeles area office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

Litigation in the Probate Courts Part II, How Long Does it Take?

In the first installment of this series of posts, we talked about the general aspects of probate litigation, and what to expect if you find yourself involved in a case.  In this post I will talk about how long each phase of a case may take, and what a litigant can expect along the way.  Often, the timing of a case is as important as the substance of the claims.

A case breaks down into the following segments:

A. Pleading, or the making of allegations by one side and the corresponding denial of allegations by the other side.  Pleading alone can take several months.  In a Probate case, it is rare for one party to file any sort of motion, the other party to receive it and object, and for the parties to both agree with the Court to move to the next stage in anything less than about four months, sometimes much longer.  The other factor is that in a Probate case there are often more than two sides.  Each beneficiary of an estate could have a different view of a matter.

B. Discovery, or additional fact finding.   Additional fact finding always takes time.  For example, let say that the matter at issue is a beneficiary demanding an accounting.  Well, the court may say "when can you have that accounting done?"  The party may respond "in three months."  Then the court orders it filed, and of course the other side gets time to examine it and have specific objections, which might take a couple of more months.  So now you could easily have taken a year.

C. Preliminary Orders, which are Orders from the Court to keep the case moving along.  There may be some preliminary orders along the way, but those could be expensive to get and are always time consuming.  To continue with the example above, a typical case may start with a beneficiary accusing the trustee of some act and asking that the trustee be removed.  However, if there has not been an accounting filed the court will want to see that first, and that may take a few months.

D.  A formal mediation. At this point a year or so may have gone by, and the parties are already growing tired.  At this point the Court will offer the parties a chance to mediate the matter before a private mediator.  Often, this is the point at which the case settles.  Mediation can be very helpful, since it is often in mediation that, for the first time, one side hears how the other side's arguments and their arguments are viewed by an unbiased third party.

E.  An Evidentiary Hearing.  Thiis is what most people consider "a trial" to be, or what they think of by "going to court."  Not only do the first four steps often take more than a year to complete, it now may take a year to get a hearing date on a matter that will take more than a couple of hours of evidence.  Two years with no resolution feels like a long time, and it is.

F.  Appeals, if any.  An actual appeal, with briefing schedule to the appellate court, could be another year.  Often, appeals are filed simply to create the possibility of additional settlement discussions.

As you can see, the rather extreme length of time it can take to obtain a court order is a factor in the dispute,  independent of the actual merits of the claim.  Time is a factor which simply must be discussed with the client, because not only is "time" an issue, but costs rise along with time.  There is no positive way to really spin this, but this is why most cases settle -- it would simply take too long and cost too much to achieve complete victory.

At Moravec, Varga & Mooney we have extensive experience with disputed matters and the various phases of a case.  We have found that it is a great help to a client to give them an honest appraisal of how long a case can actually take.  It can be an extremely bad thing if a lawyer is "too optimistic" about how quickly a client can get a case to a judge.  If the client does not understand the time and costs involved, the time and cost can simply overwhelm the merits of the case, which can be a disaster if the case is actually a good one.


Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The Los Angeles area office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

7 Strategies To Reduce Potential For Probate Litigation

The increase in probate litigation in our practice continues.  We had speculated last year that this might be due to the economy and shrinking real estate values in California. Even when litigation is necessary, and we have had to aggressively defend our clients or trustees -- we know that litigation can be costly, time-consuming and destructive to family relationships.

Accordingly, I wrote a post a couple of years ago addressing the question of how to reduce the risk of litigation in the estate and trust context during the planning stage. Although these methods are not guaranteed ways of avoiding litigation and every estate plan is different -- the ideas here are useful starting points to consider in the estate planning stage.

We had previously listed six strategies to reduce the potential for litigation, but please take note of the new number 7, which recent experience has shown may be the most effective:

1. Advise Inheritors of Inheritance Plans. 
Especially when children of the decedent are treated unequally, will contests and litigation arise from disappointed feelings of entitlement. Telling the children ahead of time what their shares will be may avoid a later dispute. One could enter into a contract (for consideration or something of value) with such a person that he or she will not object to the validity of the document. Be careful however, that advising a child that he or she will not receive an equal share may have adverse effects even if it prevents litigation after death. Thus, informing inheritors of the plans could cause family problems in the present. This will vary from family to family.

2. Use a Revocable Trust in Lieu of a Will. 
 Since a revocable trust can be funded and operate during lifetime, it is difficult to contest on the grounds that the individual was unaware of its terms. When the Settlor of the trust dies, there is no need to begin a court proceeding to "prove" the validity of the trust, such as there is for a will.

3. Use an Irrevocable Trust in Lieu of a Will or Revocable Trust. 
 An irrevocable trust is even less likely, in my experience, to be challenged than a revocable trust. Irrevocable trusts can be drafted in such a way so that transfers of property to them are not completed gifts. However, there are other risks and issues with irrevocable trusts that must be considered.

Alternatively, making a transfer that is a completed gift, paying gift tax, and filing a gift tax return disclosing details may be additional evidence that the transfer was truly intended. Again, I believe that a lifetime trust that is significantly funded is less likely to be challenged.

4. Use a Disinheritance Or No Contest Clause. 
If the testator lives in a state such as California that will enforce it under certain circumstances, a disinheritance clause (also called an in terrorem clause for the Latin word "in fear") could be used. The goal here is to prevent beneficiaries from causing a legal ruckus after the testator is gone. A lot of trust and estate litigation is not about the validity of the document, it is about its interpretation or about actions taken by the fiduciary. In order to reduce this type of litigation, a disinheritance clause can cause a forfeiture of a beneficiary's interest if such a challenge is made. The entire estate plan must be consistent with this clause.

With the advent of passage of Senate Bill 1264 which enacts Probate Code Sections 21310-21315 effective January 1, 2010, California's "no contest" law has been significantly weakened. This weakening affects wills and trusts that became irrevocable after January 1, 2001 and later. "No contest" clauses traditionally penalize parties who attempt to attack a will or a trust. Now, it will be significantly easier to attack a will or a trust in California.

To review Senate Bill 1264, go to: http://info.sen.ca.gov/pub/07-08/bill/sen/sb_1251-1300/sb_1264_bill_20080707_enrolled.pdf

5. Use Mediation or Arbitration Provisions. 
Arbitration or mediation cannot be used with respect to the challenge of a document's validity unless the parties agree to it. Using a disinheritance clause to cause forfeiture if the parties will not participate can be used. This could stop claims that are filed only to harass other beneficiaries or to delay distributions to others. Another approach would be having the parties enter into a contract agreeing to arbitration before the transfer.

6. Use a Condition Precedent to a Bequest as an Alternative Method of Causing Participation in Mediation or Arbitration. 
Since a person cannot be forced to participate in arbitration or mediation unless the law provides for enforcement, consideration must be given to how to get parties to use these methods. One can use the carrot instead of the stick. Parties can be given a benefit if they consent to use arbitration or mediation instead of resorting to court.

7.  If a particular beneficiary shows signs of being difficult, make the gift to that beneficiary a specific gift.  
The wisdom of this particular method has been illustrated by a current matter in our office.   Consider the difference between  giving a beneficiary 20% of the estate, or $1,000,000. If the former, that beneficiary may object to the valuation of all of the estate assets, i.e. "I don't think that property is worth $1,000,000, I think it is worth $1,500,000.  You are trying to under value it!"   If the latter, the specific gift may be paid in cash or currently valued securities, thus vastly reducing the area of dispute.  If the assets are of a sufficient value to draft the plan this way, much argument may be avoided.

When creating estate plans or trust documents it is important to consider the potential for litigation and whether it should be addressed prior to the death or after the death of the people creating it. While much can be done prior to death to resolve potential disputes and keep communications open, often issues only arise after the death of the trustees. During the estate planning stage, this is the time for you to consider what can be done to reduce the likelihood of estate and trust litigation.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

With respect to probate, Hank Moravec has over 20 years' experience as one of the best Los Angeles probate attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221 to request a consultation.

The firm website is http://www.moravecslaw.com/. 

Seven Questions I Ask Clients When Mediating Estate And Family Property Conflicts

I have noticed an increase in the number of estates, trusts, and probate-related disputes over the last few years. Part of the increase may be our aging baby boomer population and part of it may be due to the economic downturn. In some of our cases, we use mediation to resolve these disputes -- entire cases or isolated issues. 

For example, in cases in which a residence is the sole or primary asset, mediation with regard to a possible expedited sale of the house with the proceeds to be put in escrow pending resolution of the lawsuit can benefit the parties since empty houses deteriorate rapidly and are difficult to insure. Such a sale can also serve as a reality check for the parties who may be improperly estimating the fair market value of the house. 

Why is mediation used even when each side is sure that he or she is absolutely right or the opposing party seems impossible? Here are 5 reasons: First, it can help save litigation expenses and prevent the estate from being dissipated by legal fees. Due to court cutbacks, it takes longer to obtain hearings and cases can last for years. Second, it maintains our clients' confidentiality and keeps fights out of the public eye. In litigation, court filings are public where mediation can allow the records to be confidential. Third, it can preserve family relationships or prevent family relationships from deteriorating further.Mediation can address underlying family conflicts and take into account emotions and family dynamics in considering legal obligations and rights. 

Fourth, it allows us to obtain certainty and ensure tax savings which may not happen in litigation when a judge is deciding the case. Fifth, it allows us to use creative solutions that may not be typical legal remedies that a court can apply. In mediation we can air and acknowledge complicated emotional issues that were preventing early settlement and we can develop flexible solutions to accommodate different interests. 

Here are some questions I ask clients when we are considering mediation. This is based on cases where we have agreed to mediate conflicts in order to preserve family wealth and promote family relationships. 

• Is the conflict ripe for mediation and are the parties motivated? Mediation should occur when planning and decision making cannot continue because of unresolved conflict and the parties understand that opportunities are being lost or extra expenses and legal fees are being incurred. Mediation usually happens after we have hit a wall in the settlement process where having an experienced third party mediator can make a difference. Mediation can occur before, during, or after court proceedings.

• What are the goals for mediation? I help clients identify the goals in specific terms. Do you want the best possible monetary outcome, family peace, specific property, preservation of assets or other goals? 

• Who should participate in the mediation?  Probate cases usually involve a high degree of emotionality and numerous parties. There may be multiple decision makers (spouses, children, advisors, and significant others). If someone can veto the agreement or is necessary for it to work, consider whether that person should be at the mediation.

• Are you and the lawyers prepared?  Thorough preparation is often the key to success. It is important to have researched the underlying facts and the law with respect to the outstanding issues before going to mediation. Sometimes the key to successful resolution may lie in creative use of the tax laws. I also spend time identifying the strengths and weaknesses of both sides' positions. I usually prepare a confidential Settlement Brief providing the mediator with necessary information and background information. I will also highlight my clients' strengths and give the mediator the other sides' weaknesses. I summarize the history of prior settlement attempts and offers. I often provide the mediator with copies of relevant cases and/or statutes. Sometimes I will present expert or financial reports to help the mediator understand the issues. 

• Who should be the mediator? Mediators have different styles and approaches. Will the parties respect a former probate judge? Do the personalities and situation require an authoritative mediator to evaluates alternatives and suggests outcomes? Or would the parties respond better to a more facilitative mediator who helps the parties work out their own agreement?

• Do we have a negotiation plan? In order to be assured of getting what my client wants most, I help prioritize my client's interests, prepare a general strategy and consider which concessions might help achieve the identified goals. It sometimes takes more than 1 session to reach agreements and my client needs to be prepared to be patient and keep emotions in check and not simply issue ultimatums. Some mediations are marathons and not sprints. 

• Can we bring our proposed settlement agreement to the mediation? If I have cases where clients know what specific wording or stipulations are needed, I will bring a draft agreement, release or settlement on a memory device or laptop to the mediation to be revised as needed. Careful drafting is required for a mediated agreement to be enforceable and it is best to obtain the signatures the day of the mediation to avoid future disputes or someone changing their mind. 

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221. The firm website is www.moravecslaw.com

The firm has two offices and consultations and meetings can be held at either office. There is ample free parking adjacent to the firm's offices.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.
The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.

Five Tips for Trustees

We represent trustees and being a trustee is a job with tremendous responsibility. Since trusts have become popular estate planning tools, we have seen numerous instances where they are traps for the uninformed trustee. The trust has specific wishes and demands and expects that they will closely followed, and it is the trustee's duty to make sure that happens.

Being a trustee can be a thankless job. It can subject even the most honest person with good intentions to litigation. If you are asked to serve as trustee, weigh your decision carefully since a trustee's duties may become complicated and mired in disputes.

Here are tips that we give our trustee clients:

1. Read the trust with the aid of a trust attorney. Since the trustee is required to administer the trust according to its terms, reading all the terms of the trust and understanding the terms is important. Not all trusts are the same and in many cases it is important that the trustee read the document carefully and be assisted by an attorney familiar with trust administrations.

2. Provide annual accountings. Certain trusts are specific as to what the trustee may receive as compensation (for example, a fixed fee or a percentage of the value of the assets). But some trusts only provide for "reasonable compensation" to be paid to the trustee which can mean different things to different people. To avoid problems, keep track of the hours you spend on trust-related duties. If there is a dispute regarding compensation, be prepared to show the actual amount of time devoted to trust matters.

California Probate Code Section 16062 requires a trustee to provide the beneficiaries with annual accountings that explain the trust's income and expenses. Once the accounting is finished, serve it on the beneficiaries immediately since service triggers the three-year statute of limitations. For example, if a trustee does not serve the accounting, the statute of limitations for filing a challenge will not begin to run.

3. Track inventory. Do not assume the trust is in effect because the documents have been signed. Make sure the assets in questions were actually transferred into the trust and vested in the name of the trustee. If this has not been done, exercise best efforts to bring the trust's assets in to the trust as soon as possible. Locate all potential trust assets, and determine whether any that have not yet been transferred to the trust can still be included.

4. Get good legal advice and insurance. The best protection against a potential lawsuit is to get good legal advice and to purchase an insurance policy covering errors and omissions. Without insurance coverage, a trustee's personal assets could be at risk if an unhappy beneficiary files a lawsuit.

5. Remain neutral. Lawyers such as myself who are asked to serve as trustees are often caught in the middle. On the one hand, I will serve the trustee's interest as set forth in the trust instrument. On the other hand, I must pay attention to the interests of the beneficiaries who probably include close family and friends of the trustee. The same applies to laypersons who serve in this capacity.

The trustee's actions will be watched and possibly challenged by any beneficiary who feels he or she was treated unfairly.

There is an exception to the need to remain neutral and that is when the trust is revocable (such as while the settlor is still alive). In that situation, the trustee's duty is to the settlor and not the remainder beneficiaries; the trustee should act only in the settlor's best interest. Estateof Giraldin, 199 Cal.App.4th 577 (2011).

If you are the trustee, it may not be possible to avoid litigation but if you follow these tips it will help you avoid litigation traps. If you are a trustee and need legal advice on how to fulfill your duties, feel free to contact us.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership.
For a complimentary 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.
The firm website is http://www.moravecslaw.com/.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.