Ten characteristics of a good trustee

When I go through the estate planning questionnaire with a client I suggest they think long and hard before selecting their trustee. In fact, if they hesitate for a split second when naming someone I ask about it. For example, they might say, “well our son is probably our first choice… well… ahhh….”  The second I heard the word “probably” I was wondering what that was about. I know it does not mean their son is dishonest but maybe he has an overbearing wife? Or maybe he and his brother don’t get along. Or who knows!? The point is there is a reason they said “probably.” I thus bring you 10 characteristics to look for in your chosen trustees in no particular order:

- Trustworthy

- General competence

- Financial experience

- Life experience

- Ability to see things from the beneficiaries point of view

- Geographic location

- Above reproach

- Wants to do it

- Understand’s your desires

- Understands your future beneficiaries needs

I could go on but this is a good starting point. Let’s talk about your trustees!

-John

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Independent Trustee is a Special Trustee

Not all trustees are independent and not all trustees are special… but the terms “independent trustee” and “special trustee” have the same meaning in estate planning. They are an unrelated and economically disinterested person with limited authority in a trust. Not all trusts will have such a trustee as the vast majority of trusts just have a standard trustee. However, in some situations this special trustee is advisable.

In one of the trusts the term is defined as:

An Independent Trustee or Special Trustee shall mean a Trustee who is neither a Beneficiary of any trust established under this instrument nor a person who has transferred or joined in the transfer of property to the trust estate.  If a General Power of Appointment held by a Beneficiary of a trust may only be exercised with the consent of the Independent Trustee, the term Independent Trustee also means a person who does not have a substantial interest in the property subject to the power which is adverse to the exercise of the power in favor of the Beneficiary, the Beneficiary’s estate, the Beneficiary’s creditors, or the creditors of the Beneficiary’s estate.  If at any applicable time no Trustee then serving is an Independent Trustee, the first successor Trustee named or designated herein shall serve as the Independent Trustee for the sole purpose of exercising or not exercising the Independent Trustee’s powers.  If no successor Trustee named or designated herein would qualify as an Independent Trustee, the then serving Trustee shall petition the Court having jurisdiction over the internal affairs of this trust for the appointment of an Independent Trustee for the sole purpose of exercising or not exercising such powers.

In that same trust, later on the document names the Independent or Special Trustee with the following language

For any trust created herein, but only during the lifetime of the Settlor(s), the Settlor names as Special Trustee and successor Special Trustee, in the order and priority indicated, the persons listed below. The Special Trustee’s duties shall be limited to the exercise of discretion under this trust, and the Special Trustee shall not be concerned with other aspects of trust administration. The Special Trustee shall receive reasonable compensation.   Any Special Trustee may resign. The Special Trustee is JOHN DOUGH. If Mr. Dough is unable to act the Settlor(s) reserve the right to name a new Special Trustee provided that the new Special Trustee is not a related party as defined by IRC Section 672(c).  Notwithstanding anything herein to the contrary the Special Trustee shall specifically have the following powers exercisable as related to the children, and subsequent heirs, of the Settlor(s):

                        i.    the right to modify or amend the trust instrument to achieve favorable tax status or respond to changes in the Internal Revenue Code, state law or the rulings and regulations there under;

                        ii.   modify the terms of any power of appointment granted by the trust (although a modification or amendment may not grant a beneficial interest to any individual or class of individuals not specifically provided for under the trust instrument);

                        iii.  power to remove and name a new Trustee, trust advisor, investment committee member or distribution committee member;

                        iv.  terminate the trust;

                        v.   veto or direct trust distributions;

                        vi.  change situs or governing law of the trust, or both.

                        vii. appoint a Successor trust protector

                        viii. interpret terms of the trust instrument at the request of the Trustee; and

                        ix.  advise the Trustee on matters concerning a beneficiary. 

Hopefully this helps you to know why these trustees are special and independent   If you want to discuss how such a trustee could improve YOUR estate plan let me know.

-John

No trustee named on trust… how to fix that….

There are many instances where a California trust ends up without a trustee in charge.  When I do estate planning I try to come up with a number of back-up choices and thus this doesn’t happen for clients when I do the estate plan. However, not everybody comes to me for their planning. Some only come to clean up messes created elsewhere.  The lack of a trustee is one of those messes. There are many reasons a trust can be without a trustee. Among those:

A person has died;

A person is sick or unable to act;

A person doesn’t want to act as trustee;

Any of 100 other reasons….

So, let’s say mom has died and has a trust that names daughter #1 as trustee and no back up. I have met with clients like that.  I advise them to put in a back up and they say they don’t need to because daughter #1 will do it. I go through the list of reasons that daughter #1 might not be able to act and usually I can get them to put a back up; another family member, a friend, a professional fiduciary, a professional (CPA or attorney), or a bank or other financial institution. There are many good options. In fact, I encourage people to put several options.

However, not all attorneys do this. Some accept mom’s idea and just have daughter #1 as successor trustee. Of course, daughter #1 has died or in some other way is unable to act and that’s when I am brought in… to CLEAN UP THE MESS.

Unfortunately, in many cases this involves going to probate Court and getting a Court order appointing a successor trustee. In some cases the beneficiaries are vote on a trustee but often the beneficiaries are minors or they don’t get along. Thus we end up going to probate Court.  The key here is planning ahead to avoid this problem!

Hopefully you are reading this during the planning process when the successor trustee situation can be properly addressed. If not, and death or disability have created a mess, contact me and I will fix it for you!

-John

Who do you TRUST?

Who do you TRUST to be your trustee? Trust is in all caps for a reason… the person, or company, you select as trustee of your trust better be REALLY TRUSTWORTHY.  They will control your assets when you die of course… but also, generally, when you are incapacitated.  Yes, they will have your bank accounts, stock accounts, bonds, real estate and all other assets in THEIR CONTROL.  So I ask again, who do you TRUST to be your trustee?  There are many options for who can serve as a trustee. Here are some common possibilities to consider, in no particular order:

- HIGHLY trustworthy family or friend;

- Private professional fiduciary (pfac-pro.org);

- Banks or corporate trustees;

- CPAs, attorneys or other professionals.

There are probably other options but these are the most common. Again, however, make sure you TRUST your trustee before selecting them to be trustee of your trust or executor of your will!

If you want to talk about the options and how they will apply to your estate please let me know.

-John

Flat Fee Probate Court Attorneys

Ethics are important to us and thus our hourly fee time is carefully noted in our time keeper program. However, some clients just do not like hourly fee arrangements. They want to know exactly how much they are going to spend.  We have heard the request many times and now we can offer FLAT FEE PAYMENT OPTIONS in most California probate Court matters.

Flat fee payment options are available for most all probate court work including:

- Under $150,000 probates

- Spousal property petitions

- Trust petitions

- Heggstad petitions

- and the list goes on.

If you have the need to file in a California probate court and want a FLAT FEE that you know about BEFORE the work starts let us know!

 

10 Things the Realtor Should Provide to the Trustee or Executor

As a fiduciary (trustee, executor, administrator, personal representative, power of attorney or attorney in fact) you should have a professional Realtor working for you.  While the Realtor should do many things here are a list of 10 to keep in mind.

10 THINGS YOUR REALTOR SHOULD PROVIDE TO THE FIDUCIARY

1) Market Analysis Report in writing
2) Use probate Listing Agreement (C.A.R. Form)
3) Written marketing Plan
4) Keep detailed log of all marketing efforts and offers
5) Use of Probate Sales form (C.A.R. Form)
6) Fax/email agreement to attorney once fully signed
7) Title company information to attorney when escrow opened
8) At least 20 (or 45 – trust) days for escrow unless discussed beforehand
9) Final closing statement to attorney
10) Plus, everything they would do for a non-probate client!

Let’s talk about your case.  -John

The Use of Professional Fiduciaries in California Probate and Trusts

After 18 years in the trust and estate field of law I have seen enough situations which would suggest family members should NEVER BE used as executor, trustee, power of attorney or in other position of authority in your California estate plan.  This may seem like an exaggeration and maybe it is but only slightly.

Aside from the fact that most people’s children are not seasoned in the world of creditors, taxes, investments and a whole host of other issues that come up after incapacity or death… many people make bad choices when given the opportunity.

Client’s never see a potential problem as their kids are great… just ask them!  They probably are great a matter of fact.  However, death and money can combine to make people make bad choices.  By selecting a California Professional Fiduciary to be your trustee, executor and power of attorney you take the emotion out of it for your family.  Take away the emotion with how mom’s final hospital stay was handled.  Take away the emotion from that time when your kids were 5 and 6 and the 6 year old embarrassed the 5 year old. Take away the feeling of entitlement for the adult child that takes care of you before your death and thus feels entitled to take more, or all, of your estate for themselves.  You can take  away all of this  by selecting a California Professional Fiduciary!

In fact, California now has a state test and license.  These requirements along with the professional being bondable helps ensure your family’s wealth will not be squandered on attorney fees or worse!

Talk to your California estate planning attorney about the use of a professional fiduciary in your estate plan.

-John

Law Practice Administrator after Death or Disability

Selling a business in probate, after death, requires special care. However, when the business is a law practice there are even more rules. This, of course, is due to the interplay between the probate code and the California Bar’s rules of ethics.

If you are a lawyer then you know you can’t split fees with a non-lawyer and you probably guessed your loved one can’t manage your business after death unless they are a lawyer. However, you can appoint a law practice administrator or law practice manager to run your business or sell it after death.  The probate code, at PC 9764 (in full below) lays out the rules.

Additionally, if a law practice administrator is appointed in a trust you can get Court confirmation of that administrator by PC 17200(b)(23) at death OR disability. That code provides as follows,

(23) If a member of the State Bar of California has transferred the economic interest of his or her practice to a trustee and if the member is a disabled member under Section 2468, a petition may be brought to appoint a practice administrator. The procedures, including, but not limited to, notice requirements, that apply to the appointment of a practice administrator for a disabled member shall apply to the petition brought under this section.”

As you have probably guessed by now proper estate planning is crucial to maximize the value of your business!

Let’s talk about YOUR law practice!    -John

 

PROBATE CODE SECTION 9760-9764

9760. (a) As used in this section, “decedent’s business” means an
unincorporated business or venture in which the decedent was engaged
or which was wholly or partly owned by the decedent at the time of
the decedent’s death, but does not include a business operated by a
partnership in which the decedent was a partner.
(b) If it is to the advantage of the estate and in the best
interest of the interested persons, the personal representative, with
or without court authorization, may continue the operation of the
decedent’s business; but the personal representative may not continue
the operation of the decedent’s business for a period of more than
six months from the date letters are first issued to a personal
representative unless a court order has been obtained under this
section authorizing the personal representative to continue the
operation of the business.
(c) The personal representative or any interested person may file
a petition requesting an order (1) authorizing the personal
representative to continue the operation of the decedent’s business
or (2) directing the personal representative to discontinue the
operation of the decedent’s business. The petition shall show the
advantage to the estate and the benefit to the interested persons of
the order requested. Notice of the hearing on the petition shall be
given as provided in Section 1220.
(d) If a petition is filed under this section, the court may make
an order that either:
(1) Authorizes the personal representative to continue the
operation of the decedent’s business to such an extent and subject to
such restrictions as the court determines to be to the advantage of
the estate and in the best interest of the interested persons.
(2) Directs the personal representative to discontinue the
operation of the decedent’s business within the time specified in,
and in accordance with the provisions of, the order.

 

9761. If a partnership existed between the decedent and another
person at the time of the decedent’s death, on application of the
personal representative, the court may order any surviving partner to
render an account pursuant to Section 15510, 15634, or 16807 of the
Corporations Code. An order under this section may be enforced by the
court’s power to punish for contempt.

 

9762. (a) After authorization by order of court upon a showing that
it would be to the advantage of the estate and in the best interest
of the interested persons, the personal representative may continue
as a general or a limited partner in any partnership in which the
decedent was a general partner at the time of death. In its order,
the court may specify any terms and conditions of the personal
representative’s participation as a partner that the court determines
are to the advantage of the estate and in the best interest of the
interested persons, but any terms and conditions that are
inconsistent with the terms of any written partnership agreement are
subject to the written consent of all of the surviving partners.
(b) If there is a written partnership agreement permitting the
decedent’s personal representative to participate as a partner, the
personal representative has all the rights, powers, duties, and
obligations provided in the written partnership agreement, except as
otherwise ordered by the court pursuant to subdivision (a).
(c) If there is not a written partnership agreement, the personal
representative has the rights, powers, duties, and obligations that
the court specifies in its order pursuant to subdivision (a).
(d) To obtain an order under this section, the personal
representative or any interested person shall file a petition showing
that the order requested would be to the advantage of the estate and
in the best interest of the interested persons. Notice of the
hearing on the petition shall be given as provided in Section 1220.
In addition, unless the court otherwise orders, the petitioner, not
less than 15 days before the hearing, shall cause notice of hearing
and a copy of the petition to be mailed to each of the surviving
general partners at his or her last known address.

 

9763. (a) If the decedent was a general partner, the personal
representative may commence and maintain any action against the
surviving partner that the decedent could have commenced and
maintained.
(b) The personal representative may exercise the decedent’s rights
as a limited partner as provided in Section 15675 of the
Corporations Code.

 

9764. (a) The personal representative of the estate of a deceased
attorney who was engaged in a practice of law at the time of his or
her death or other person interested in the estate may bring a
petition for appointment of an active member of the State Bar of
California to take control of the files and assets of the practice of
the deceased member.
(b) The petition may be filed and heard on such notice that the
court determines is in the best interests of the estate of the
deceased member. If the petition alleges that the immediate
appointment of a practice administrator is required to safeguard the
interests of the estate, the court may dispense with notice only if
the personal representative is the petitioner or has joined in the
petition or has otherwise waived notice of hearing on the petition.
(c) The petition shall indicate the powers sought for the practice
administrator from the list of powers set forth in Section 6185 of
the Business and Professions Code. These powers shall be specifically
listed in the order appointing the practice administrator.
(d) The petition shall allege the value of the assets that are to
come under the control of the practice administrator, including, but
not limited by the amount of funds in all accounts used by the
deceased member. The court shall require the filing of a surety bond
in the amount of the value of the personal property to be filed with
the court by the practice administrator. No action may be taken by
the practice administrator unless a bond has been fully filed with
the court.
(e) The practice administrator shall not be the attorney
representing the personal representative.
(f) The court shall appoint the attorney nominated by the deceased
member in a writing, including, but not limited to, the deceased
member’s will, unless the court concludes that the appointment of the
nominated person would be contrary to the best interests of the
estate or would create a conflict of interest with any of the clients
of the deceased member.
(g) The practice administrator shall be compensated only upon
order of the court making the appointment for his or her reasonable
and necessary services. The law practice shall be the source of the
compensation for the practice administrator unless the assets are
insufficient in which case, the compensation of the practice
administrator shall be charged against the assets of the estate as a
cost of administration. The practice administrator shall also be
entitled to reimbursement of his or her costs.
(h) Upon conclusion of the services of the practice administrator,
the practice administrator shall render an accounting and petition
for its approval by the superior court making the appointment. Upon
settlement of the accounting, the practice administrator shall be
discharged and the surety on his or her bond exonerated.
(i) For the purposes of this section, the person appointed to take
control of the practice of the deceased member shall be referred to
as the “practice administrator” and the decedent shall be referred to
as the “deceased member.”

Trust Administration Issues

Whether you are a trustee or a beneficiary of a California trust it’s important to be familiar with the relevant rules laid out in the California Probate Code. In particular section 10160 et seq has a ton of important things to consider including access to documents, accountings, etc….  Check them out here and let me know of any questions.   -John

CALIFORNIA CODES
PROBATE CODE
SECTION 10160-10168
10160.  The estate is not liable to an agent, broker, or auctioneer
under a contract for the sale of property or for any fee, commission,
or other compensation or expenses in connection with a sale of
property unless the following requirements are satisfied:
(a) An actual sale is made.
(b) If court confirmation or approval is required, the sale is
confirmed or approved by the court as required.
(c) The sale is consummated.

 

10160.5.  The estate is not liable to an agent or broker under a
contract for the sale of property or for any fee, commission, or
other compensation or expenses in connection with sale of the
property in either of the following cases:
(a) Where the agent or broker, directly or indirectly, is the
purchaser of the property.
(b) Where the agent or broker representing the purchaser to whom
the sale is confirmed has any interest in the purchaser.

 

10161.  (a) Subject to the provisions of this article, whether or
not the agent or broker has a contract with the personal
representative, the fee, commission, or other compensation of an
agent or broker in connection with a sale of property shall be the
amount the court, in its discretion, determines to be a reasonable
compensation for the services of the agent or broker to the estate.
(b) Unless the agent or broker holds a contract granting an
exclusive right to sell the property, an agent or broker is not
entitled to any fee, commission, or other compensation for services
to the estate in connection with a sale except in the following
cases:
(1) Where the agent or broker produces the original bid which is
returned to the court for confirmation.
(2) Where the property is sold on an increased bid, made at the
time of the hearing on the petition for confirmation, to a purchaser
procured by the agent or broker.
(c) If the agent or broker has a contract with the personal
representative, the amount of the compensation of the agent or broker
in connection with the sale of property shall not exceed the amount
provided for in the contract.

 

10162.  (a) Subject to subdivision (b), where the bid returned to
the court for confirmation is made by a person who is not represented
by an agent or broker and the successful bidder is represented by an
agent or broker, the compensation of the agent or broker who
procured the purchaser to whom the sale is confirmed shall not exceed
one-half of the difference between the amount of the bid in the
original return and the amount of the successful bid.
(b) This section does not limit the compensation of the agent or
broker who holds a contract under Section 10150 granting him or her
the exclusive right to sell the property.

 

10162.3.  (a) This section applies if all of the following
circumstances exist:
(1) There is no agent or broker holding a contract under Section
10150 granting the exclusive right to sell the property.
(2) The bid returned to court for confirmation is made by a
purchaser represented by an agent or broker.
(3) The court confirms the sale to that purchaser either on the
bid returned to court for confirmation or on an increased bid made at
the time of the hearing on the petition for confirmation.
(b) If all the circumstances described in subdivision (a) exist,
the court shall allow the agent or broker who procured the purchaser
to whom the sale is confirmed the compensation determined under
Section 10161 on the full amount for which the sale is confirmed.

 

10162.5.  Subject to Section 10162.6, where an agent or broker holds
a contract under Section 10150 granting the exclusive right to sell
the property, the court shall allow to the agent or broker holding
the contract the compensation determined under Section 10161 on:
(a) The full amount for which the sale is confirmed in either of
the following circumstances:
(1) The bid returned to the court for confirmation is made by a
purchaser who is not represented by an agent or broker and the court
confirms the sale to that purchaser on that bid.
(2) The bid returned to the court for confirmation is made by a
purchaser who is represented by the agent or broker holding the
contract and the court confirms the sale to that purchaser on an
increased bid made at the time of the hearing on the petition for
confirmation.
(b) The amount of the original bid if both of the following
circumstances exist:
(1) The bid returned to court for confirmation is made by a
purchaser who is not represented by an agent or broker or who is
represented by the agent or broker holding a contract under Section
10150 granting the exclusive right to sell the property.
(2) The court confirms the sale on an increased bid, made at the
time of the hearing on the petition for confirmation, to a purchaser
who was not procured by a bona fide agent or broker.

 

10162.6.  (a) This section applies if both of the following
circumstances exist:
(1) An agent or broker holds a contract under Section 10150
granting the exclusive right to sell the property.
(2) The contract provides that no compensation is payable to the
agent or broker holding the contract if sale is confirmed to a
particular purchaser named in the contract.
(b) If the court confirms the sale to the purchaser named in the
contract, whether on an original bid returned to the court or on an
increased bid made at the time of the hearing on the petition for
confirmation, the compensation of any agents or brokers involved in
the sale is determined as provided in this article, except that no
compensation is payable to the agent or broker holding the contract.
(c) If the court confirms the sale to a purchaser other than the
person named in the contract, whether on an original bid returned to
the court or on an increased bid made at the time of the hearing on
the petition for confirmation, the compensation of the agent or
broker holding the contract, and of any other agents or brokers
involved in the sale, is determined under this article as if the
limitation in the contract did not exist.

 

10162.7.  (a) Subject to Section 10162.6, this section applies if
all of the following circumstances exist:
(1) There is an agent or broker holding a contract under Section
10150 granting the exclusive right to sell the property.
(2) The bid returned to court for confirmation is made by a
purchaser procured by another agent or broker.
(3) The court confirms the sale to that purchaser either on the
bid returned to court for confirmation or on an increased bid made at
the time of the hearing on the petition for confirmation.
(b) If all the circumstances described in subdivision (a) exist,
the court shall allow the compensation determined under Section 10161
on the full amount for which the sale is confirmed. The compensation
allowed by the court shall be divided between the agent or broker
holding the contract and the other agent or broker as is provided in
any agreement between the agent or broker holding the contract and
the other agent or broker. If there is no agreement, the compensation
on the amount of the original bid returned to the court shall be
divided equally between the agent or broker holding the contract and
the other agent or broker and, if the sale is confirmed on an
increased bid, the other agent or broker shall be paid all of the
compensation on the difference between the original bid and the
amount for which the sale is confirmed.

 

10163.  Subject to Sections 10162 and 10162.6, where the original
bid returned to the court for confirmation was made by a purchaser
who was not procured by an agent or broker, the court shall allow the
compensation determined under Section 10161 on the full amount for
which the sale is confirmed to the agent or broker who procured the
purchaser to whom the sale is confirmed if either of the following
conditions is satisfied:
(a) The court confirms a sale on an increased bid, made at the
time of the hearing on the petition for confirmation, to a purchaser
procured by an agent or broker holding a contract under Section 10150
granting the exclusive right to sell the property.
(b) There is no agent or broker holding a contract under Section
10150 granting the exclusive right to sell the property and the court
confirms a sale on an increased bid, made at the time of the hearing
on the petition for confirmation, to a purchaser procured by a bona
fide agent or broker.

 

10164.  (a) This section applies only where the court confirms a
sale on an increased bid, made at the time of the hearing on the
petition for confirmation, to a purchaser who was not procured by a
bona fide agent or broker.
(b) Except as provided in subdivision (c), the court shall allow
the compensation determined under Section 10161 on the amount of the
original bid to the agent or broker whose original bid was returned
to the court.
(c) If an agent or broker holds a contract under Section 10150
granting the exclusive right to sell the property and the original
bid returned to the court is made by a purchaser who was procured by
another agent or broker, the compensation determined under Section
10161 on the amount of the original bid shall be divided between the
agent or broker holding the contract and the other agent or broker as
is provided in any agreement between the agent or broker holding the
contract and the other agent or broker. If there is no agreement,
the compensation shall be divided equally between the agent or broker
holding the contract and the other agent or broker.

 

10165.  (a)  Subject to Section 10162.6, where the court confirms a
sale on an increased bid, made at the time of the hearing on the
petition for confirmation, to a purchaser procured by a bona fide
agent or broker, the court shall allow the compensation determined
under Section 10161 on the full amount for which the sale is
confirmed, as provided in this section, if either of the following
conditions is satisfied:
(1) The original bid returned to the court for confirmation was
made by a purchaser who was procured by another agent or broker.
(2)  The original bid returned to the court for confirmation was
made by a purchaser who was not represented by an agent or broker,
and another agent or broker holds a contract under Section 10150
granting the exclusive right to sell the property.
(b) The agent or broker who procured the purchaser to whom the
sale is confirmed shall be paid one-half of the compensation on the
amount of the original bid and all of the compensation on the
difference between the original bid and the amount for which the sale
is confirmed.
(c) The other one-half of the compensation on the amount of the
original bid shall be paid as follows:
(1) If the original bid returned to the court is made by a
purchaser who was procured by the agent or broker holding a contract
under Section 10150 granting the exclusive right to sell the
property, the entire one-half of the compensation on the original bid
shall be paid to that agent or broker.
(2) If the original bid returned to the court is made by a
purchaser who was procured by a bona fide agent or broker and there
is no agent or broker holding a contract under Section 10150 granting
the exclusive right to sell the property, the entire one-half of the
compensation on the original bid shall be paid to that agent or
broker.
(3) If there is an agent or broker who holds a contract under
Section 10150 granting the exclusive right to sell the property and
the original bid returned to the court is made by a purchaser who was
procured by another agent or broker, the one-half of the
compensation on the amount of the original bid shall be divided
between the agent or broker holding the contract granting the
exclusive right to sell the property and the other agent or broker
whose original bid was returned to the court for confirmation as is
provided in any agreement between the agent or broker holding the
contract and the other agent or broker. If there is no agreement, the
one-half of the compensation on the amount of the original bid shall
be divided equally between the agent or broker holding the contract
and the other agent or broker whose original bid was returned to the
court for confirmation.
(4) If there is an agent or broker who holds a contract under
Section 10150 granting the exclusive right to sell the property and
the original bid returned to the court is made by a purchaser who is
not represented by an agent or broker and the court confirms the sale
on an increased bid, made at the time of the hearing on the petition
for confirmation, to a purchaser procured by another agent or
broker, the entire one-half of the compensation on the original bid
shall be paid to the agent or broker holding the contract.
(5) If the agent or broker compensated under subdivision (b) holds
a contract under Section 10150 granting the exclusive right to sell
the property, the entire one-half of the compensation on the original
bid shall be paid to the other agent or broker who procured the
original bid returned to the court.

 

10166.  Notwithstanding that a bid contains a condition that a
certain amount of the bid shall be paid to an agent or broker by the
personal representative, only such compensation as is proper under
this article shall be allowed. Acceptance of the bid by the court
binds the bidder even though the compensation allowed by the court is
less than that specified by the condition.

 

10167.  (a) Subject to subdivision (b), whether or not the
auctioneer has a contract with the personal representative, the fees,
compensation, and expenses of an auctioneer in connection with a
sale of property shall be the amount the court, in its discretion,
determines to be a reasonable compensation for the services of the
auctioneer to the estate.
(b) If the auctioneer has a contract with the personal
representative, the amount of the compensation of the auctioneer in
connection with the sale of property shall not exceed the amount
provided for in the contract.

 

10168.  This article does not supersede any agreement cooperating
agents or brokers may have among themselves to divide the
compensation payable under this article.

 

 

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.