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Attorney as Trustee

I met with a client last week who really wants to name me as their trustee when they can no longer function in that capacity (beit by death or incapacity). This is not work we actively seek out but we are generally happy to help clients who desire this. I have gone over so many different trustee options with the client but they insist. I discussed options including: family member, trusted friend, professional fiduciary, bank, another attorney, CPA, and bookkeeper. However, they really want me.

In cases where we take this positions we advise our clients of the provisions of California Probate Code 15642 (pasted below). The problem is that an attorney who drafts the document is presumed to be in a position to get themselves named as trustee. Although, in our firm, it’s quite the opposite the protections of the California probate code still apply. Thus we advise our clients to get a certificate of independent review where another attorney, preferably one not a part of our firm, meets with the client to confirm their wishes. You can see what a certificate of independent review looks like below in the pasted California probate code sections.  Contact me with questions about this or any other trust or estate situation you have in California.  -John

PROBATE CODE
SECTION 15640-15645

15640.  A trustee who has accepted the trust may resign only by one
of the following methods:
(a) As provided in the trust instrument.
(b) In the case of a revocable trust, with the consent of the
person holding the power to revoke the trust.
(c) In the case of a trust that is not revocable, with the consent
of all adult beneficiaries who are receiving or are entitled to
receive income under the trust or to receive a distribution of
principal if the trust were terminated at the time consent is sought.
If a beneficiary has a conservator, the conservator may consent to
the trustee’s resignation on behalf of the conservatee without
obtaining court approval. Without limiting the power of the
beneficiary to consent to the trustee’s resignation, if the
beneficiary has designated an attorney in fact who has the power
under the power of attorney to consent to the trustee’s resignation,
the attorney in fact may consent to the resignation.
(d) Pursuant to a court order obtained on petition by the trustee
under Section 17200. The court shall accept the trustee’s resignation
and may make any orders necessary for the preservation of the trust
property, including the appointment of a receiver or a temporary
trustee.

15641.  The liability for acts or omissions of a resigning trustee
or of the sureties on the trustee’s bond, if any, is not released or
affected in any manner by the trustee’s resignation.

15642.  (a) A trustee may be removed in accordance with the trust
instrument, by the court on its own motion, or on petition of a
settlor, cotrustee, or beneficiary under Section 17200.
(b) The grounds for removal of a trustee by the court include the
following:
(1) Where the trustee has committed a breach of the trust.
(2) Where the trustee is insolvent or otherwise unfit to
administer the trust.
(3) Where hostility or lack of cooperation among cotrustees
impairs the administration of the trust.
(4) Where the trustee fails or declines to act.
(5) Where the trustee’s compensation is excessive under the
circumstances.
(6) Where the sole trustee is a person described in subdivision
(a) of Section 21350 or subdivision (a) of Section 21380, whether or
not the person is the transferee of a donative transfer by the
transferor, unless, based upon any evidence of the intent of the
settlor and all other facts and circumstances, which shall be made
known to the court, the court finds that it is consistent with the
settlor’s intent that the trustee continue to serve and that this
intent was not the product of fraud or undue influence. Any waiver by
the settlor of this provision is against public policy and shall be
void. This paragraph shall not apply to instruments that became
irrevocable on or before January 1, 1994. This paragraph shall not
apply if any of the following conditions are met:
(A) The settlor is related by blood or marriage to, or is a
cohabitant with, any one or more of the trustees, the person who
drafted or transcribed the instrument, or the person who caused the
instrument to be transcribed.
(B) The instrument is reviewed by an independent attorney who (1)
counsels the settlor about the nature of his or her intended trustee
designation and (2) signs and delivers to the settlor and the
designated trustee a certificate in substantially the following form:

“CERTIFICATE OF INDEPENDENT REVIEW
I, _______________________________, have reviewed
(attorney’s name)
____________________and have counseled my client,
(name of instrument)
__________, fully and privately on the nature and
(name of client)
legal effect of the designation as trustee of ___
(name of trustee)
contained in that instrument. I am so
disassociated from the interest of the person
named as trustee as to be in a position to
advise my client impartially and confidentially
as to the consequences of the designation. On
the basis of this counsel, I conclude that the
designation of a person who would otherwise be
subject to removal under paragraph (6) of
subdivision (b) of Section 15642 of the Probate
Code is clearly the settlor’s intent and that
intent is not the product of fraud or undue
influence.
____________________________ ___________________”
(Name of Attorney)           (Date)

This independent review and certification may occur either before
or after the instrument has been executed, and if it occurs after the
date of execution, the named trustee shall not be subject to removal
under this paragraph. Any attorney whose written engagement signed
by the client is expressly limited to the preparation of a
certificate under this subdivision, including the prior counseling,
shall not be considered to otherwise represent the client.
(C) After full disclosure of the relationships of the persons
involved, the instrument is approved pursuant to an order under
Article 10 (commencing with Section 2580) of Chapter 6 of Part 4 of
Division 4.
(7) If, as determined under Part 17 (commencing with Section 810)
of Division 2, the trustee is substantially unable to manage the
trust’s financial resources or is otherwise substantially unable to
execute properly the duties of the office. When the trustee holds the
power to revoke the trust, substantial inability to manage the trust’
s financial resources or otherwise execute properly the duties of the
office may not be proved solely by isolated incidents of negligence
or improvidence.
(8) If the trustee is substantially unable to resist fraud or
undue influence. When the trustee holds the power to revoke the
trust, substantial inability to resist fraud or undue influence may
not be proved solely by isolated incidents of negligence or
improvidence.
(9) For other good cause.
(c) If, pursuant to paragraph (6) of subdivision (b), the court
finds that the designation of the trustee was not consistent with the
intent of the settlor or was the product of fraud or undue
influence, the person being removed as trustee shall bear all costs
of the proceeding, including reasonable attorney’s fees.
(d) If the court finds that the petition for removal of the
trustee was filed in bad faith and that removal would be contrary to
the settlor’s intent, the court may order that the person or persons
seeking the removal of the trustee bear all or any part of the costs
of the proceeding, including reasonable attorney’s fees.
(e) If it appears to the court that trust property or the
interests of a beneficiary may suffer loss or injury pending a
decision on a petition for removal of a trustee and any appellate
review, the court may, on its own motion or on petition of a
cotrustee or beneficiary, compel the trustee whose removal is sought
to surrender trust property to a cotrustee or to a receiver or
temporary trustee. The court may also suspend the powers of the
trustee to the extent the court deems necessary.
(f) For purposes of this section, the term “related by blood or
marriage” shall include persons within the seventh degree.

 

15643.  There is a vacancy in the office of trustee in any of the
following circumstances:
(a) The person named as trustee rejects the trust.
(b) The person named as trustee cannot be identified or does not
exist.
(c) The trustee resigns or is removed.
(d) The trustee dies.
(e) A conservator or guardian of the person or estate of an
individual trustee is appointed.
(f) The trustee is the subject of an order for relief in
bankruptcy.
(g) A trust company’s charter is revoked or powers are suspended,
if the revocation or suspension is to be in effect for a period of 30
days or more.
(h) A receiver is appointed for a trust company if the appointment
is not vacated within a period of 30 days.
15644.  When a vacancy has occurred in the office of trustee, the
former trustee who holds property of the trust shall deliver the
trust property to the successor trustee or a person appointed by the
court to receive the property and remains responsible for the trust
property until it is delivered. A trustee who has resigned or is
removed has the powers reasonably necessary under the circumstances
to preserve the trust property until it is delivered to the successor
trustee and to perform actions necessary to complete the resigning
or removed trustee’s administration of the trust.

15645.  If the trustee of a trust that is not revocable has refused
to transfer administration of the trust to a successor trust company
on request of the beneficiaries described in subdivision (c) of
Section 15640 and the court in subsequent proceedings under Section
17200 makes an order removing the existing trustee and appointing a
trust company as successor trustee, the court may, in its discretion,
award costs and reasonable attorney’s fees incurred by the
petitioner in the proceeding to be paid by the trustee or from the
trust as ordered by the court.

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