In a recent California case that saw trust and probate litigation, six siblings named in a trust after their parents’ deaths, couldn’t agree on how to move forward. Five of the siblings were in agreement to leave the funds in the trust in hopes of appreciation. One sibling disagreed and wanted to be cashed out of the trust. How the court responded is certainly new precedent for these type of trust litigation cases.
Generally, liquidating a trust can be tricky because the valuation of assets and the distribution of those assets can have costs and barriers before completion. While it’s tricky, it’s not impossible. The California Court of Appeals heard this case in which one of the six siblings wasn’t in agreement with how to proceed with the trust left to all 6 of them. The petition filed in trial court asked for the court to determine the 6th sibling’s share, as appraisals and valuations for her share came in at various amounts, which isn’t unusual for an asset such as a trust.
In a strange turn of events, all siblings were removed from the position as co-trustee to the estate and a private professional fiduciary was appointed by the court to handle the liquidation and distribution of assets. The trial court actually acted on its own motion, not that of the siblings, to have them removed. The trial court found that the co-trustees did not act loyally and failed to distribute the assets. However, the appellate court reversed this decision.
The six siblings are back in the driver’s seat in terms of their status of co-trustees of the estate after the appellate court’s decision. The distribution, or non-distribution, is still pending. This was the original issue brought to trial court.