Appellate Decision Delineates When Fee Recovery Allowable to Trustee in Probate Proceedings, But Sustains $175,000 Additional Fee Award Against Trustee Contesting Activities In Bad Faith.
Stephens v. Gaustad, Case No. G045073 (4th Dist., Div. 3 Mar. 13, 2012) (unpublished) admittedly was a “split decision” on when a trustee can recoup attorney’s fees expended in probate proceedings. It also affirmed a $175,000 fee award against trustee under Probate Code section 17211(b) for taking unreasonable, bad faith actions in an accounting dispute.
Here is how it panned out.
The appellate court sustained the trial court’s refusal to surcharge the trust for attorney work that only benefited the trustee personally, mainly to defend self-dealing charges. (Whittlesey v. Aiello, 104 Cal.App.4th 1221, 1231 (2002).) However, $5,000 in fees were expended to prepare the second accounting such that trustee did meet her burden of showing the expenditures were for the benefit of the trust.
However, trustee principally was trying to overturn a $175,000 fee award to trust beneficiaries (trustee’s brothers) under Probate Code section 17211(b), which provides for fees against a trustee where a trustee’s opposition to an accounting contest was “without reasonable cause and in bad faith.” It did not happen. Trustee’s “reliance on counsel” defense proved unavailing because the “advise was too good to be true” (it was implausible so that it provided no defense to her attorneys’ advise that she did not breach any fiduciary duties or self deal in the main probate proceeding).
Acting Presiding Justice Rylaarsdam was the author of this 3-0 opinion.
Comments