Suing Beneficiary Not Entitled to Fee Recovery Given Trustee’s Actions Were Found to Not To Be in Bad Faith.
Lowe v. Holk, Case No. E053071 (4th Dist., Div. 2 Apr. 26, 2012) (unpublished) involved a fight between trustee son and beneficiary daughter over certain assets of father and trustee son’s administration of the trust estate. Beneficiary daughter was denied certain surcharge requests for attorney’s fees incurred by trustee son that were charged to the trust as well as daughter was denied her request for reimbursement of fees.
Historic American Buildings Survey. Alex Bush, photographer. 1937. Alabama. Library of Congress.
Those determinations were affirmed on appeal, contrary to daughter’s challenges.
With respect to her claim that certain fees incurred by son should not be paid by the trust, the appellate court found no abuse of discretion in allowing him some fee recovery given that the probate court concluded the son acted in good faith and denied daughter’s request to remove him as trustee. Son was surcharged about $141,657.58 in certain expenses, but he did mainly prevail on the removal request and gained a finding that he acted in good faith--good enough to gain affirmance under the deferential abuse of discretion standard of review.
Beneficiaries, generally, have to bear their own attorney’s fees in probate proceedings. However, there is an exception under Probate Code section 17211(b) in situations where the trustee’s opposition to an accounting challenge is found to be unreasonable and made in bad faith. The finding that trustee acted in good faith was the end of the story, bolstered by his actions in delaying to see if the depressed real estate market would improve only to liquidate when it was clear that the market was flaccid.