About this case study. The matter described is a representative example. Specific facts, amounts, dates, and identifying details have been modified to protect client confidentiality consistent with California Rule of Professional Conduct 1.6. Every case is different and is decided on its own facts. The outcome in any particular matter depends on specific circumstances, applicable law, the conduct of opposing parties, and other variables that cannot be predicted in advance. No representation is made that the firm will achieve the same or similar results in your case. Prior results do not guarantee a similar outcome.
After the death of their mother, three adult siblings discovered that their father's revocable living trust - valued at approximately $2.1 million in real property and investment accounts - was being mismanaged by a co-trustee (their eldest sibling). The co-trustee had taken out a $280,000 home equity line of credit against trust property without beneficiary consent, transferred $165,000 from trust accounts into a personal business venture, and had failed to provide required trust accountings for over two years.
The co-trustee argued they had broad discretionary powers under the trust instrument and that the distributions were legitimate trust expenses. They also claimed the HELOC was taken to fund necessary property repairs. Family dynamics complicated the matter - two siblings wanted to preserve the relationship while protecting the estate, while the co-trustee became increasingly hostile when confronted.
We filed a petition under California Probate Code Section 17200 requesting a full trust accounting, removal of the co-trustee, and surcharge for breach of fiduciary duty. We also sought a temporary restraining order to freeze trust assets and prevent further dissipation.
A forensic accountant traced the $165,000 transfer directly to the co-trustee's personal LLC, which had no connection to the trust. The purported "repairs" funded by the HELOC were largely cosmetic renovations to a property the co-trustee was personally occupying.
The court removed the co-trustee, appointed a professional successor trustee, and ordered the former co-trustee to repay $445,000 to the trust (the HELOC balance plus the personal transfers). The full $2.1 million estate was preserved for the beneficiaries.
The matter resolved through a stipulated judgment after the forensic accounting made continued defense untenable.
Trustees owe fiduciary duties to all beneficiaries, including the duty of loyalty, the duty to avoid self-dealing, and the duty to provide accountings. California law provides robust remedies when these duties are breached - including removal, surcharge, and recovery of misappropriated assets.
California law gives beneficiaries powerful tools to hold trustees accountable. We know how to use them.