Personal Injury, Probate, Employment, & Complex Litigation


Who Can Bring Trustee Misconduct To The Court's Attention?

The Trustee owes the beneficiaries many duties. However, who qualifies as a beneficiary can often be confusing. Probate Code section 24 defines a beneficiary of a trust as anyone who has any present or future interest whether vested or contingent.

The first part of that definition is easy enough to understand. A present interest in a trust would be an income beneficiary and a future interest would be a remainder beneficiary.

However, the difference between vested and contingent can be confusing. A vested right is one in which no other event has to occur before a beneficiary is entitled to a future right. So, if the trust says that the real property is to be used to house the decedent’s spouse until their death, and then it is to be sold and the funds shall be split evenly among the decedent’s children, then the children’s rights are vested future rights.

Compare that scenario to one in which the decedent’s trust holds that the real property is to be used to house the decedent’s spouse, and then upon the decedent’s spouse’s death, decedent’s daughter if she survives the spouse, if not, to decedent’s brother.

In that scenario both the decedent’s daughter and the decedent’s brother are contingent future beneficiaries, as their future right is contingent on an event occurring.

But why does all of this matter? Well, it is confusing who the trustee actually owes certain duties to when the beneficiary is a contingent future beneficiary—in particular there is confusion as to whether a future contingent beneficiary can request an accounting. Probate Code section 16062 carves out contingent future beneficiaries from the trustee’s duty to provide annual accountings.

However, as found in Estate of Giraldin (2012) 55 Cal.4th 1058, a contingent beneficiary has standing to bring a petition under Probate Code section 17200, meaning that the contingent beneficiary can bring a petition for the court to—among other things—compel the trustee to account to the contingent beneficiary.

So, while you may feel like as a contingent beneficiary you have no grounds to sue the trustee if they are acting inappropriately, this is not the case. If you sit on your rights and the trust assets are gone by the time your rights are vested, it will likely be too late for you to recover the assets wrongfully disbursed.