TRUST LITIGATION – SETTLEMENT AGREEMENT
A Trust Litigation Settlement Agreement is typically entered into between the Trustee and a beneficiary of the Trust or third-party creditor. The focus of this article is a Settlement Agreement between the Trustee and a beneficiary of the Trust. A Trust Litigation Settlement Agreement can be a vital tool in resolving undisputed issues such as any alleged breach of fiduciary duty on the part of the Trustee or the distributive share of the beneficiary. A Trust Litigation Settlement Agreement will eliminate some or all of the issues which will need to be decided through a trial and will result in less time and expense to both parties. Only matters which cannot be agreed upon need to be set for trial and decided by the Judge. Our aim as your attorney will be to resolve the uncontested issues to save you time and money and focus our time and your money on the issues which are in dispute. Any issues remaining will be brought before either the Los Angeles or Orange County Superior Courts under Probate Code Section 11700:
- a) The superior court having jurisdiction over the trust pursuant to this part has exclusive jurisdiction of proceedings concerning the internal affairs of trusts.
(b) The superior court having jurisdiction over the trust pursuant to this part has concurrent jurisdiction of the following:
(1) Actions and proceedings to determine the existence of trusts.
(2) Actions and proceedings by or against creditors or debtors of trusts.
(3) Other actions and proceedings involving trustees and third persons.
A key difference between a Civil Litigation Settlement Agreement and a Trust Litigation Settlement Agreement is that the Trustee owes numerous fiduciary duties to the Trust and/or the beneficiaries of the Trust including but not limited to the duty(s) of loyalty, impartiality, to avoid conflicts of interests, to control and preserve trust property, to make trust property productive, to keep trust property separate, to enforce claims, to defend claims and to use special skills. (See Probate Code §§ 16000 — 16015 https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=PROB&division=9.&title=&part=4.&chapter=1.&article=1.
In addition to the enumerated fiduciary duties the Trustee must administer the Trust with reasonable care, skill and caution under the circumstances as set forth in Probate Code § 16040:
(a) The trustee shall administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument
(b) The settlor may expand or restrict the standard provided in subdivision (a) by express provisions in the trust instrument. A trustee is not liable to a beneficiary for the trustee’s good faith reliance on these express provisions.
Cal Prob Code § 16040 https://codes.findlaw.com/ca/probate-code/prob-sect-16040.html
As such, a Trustee must negotiate any Settlement Agreement in good faith and should not seek to act partially for any reason. A Trustee will most likely be required by the terms of the Trust to obtain approval from any remaining Trust beneficiaries prior to entering into any binding Settlement Agreement. If you are a Trustee or beneficiary and would like to learn more about the negotiation procedures applicable to a Trust Litigation Settlement Agreement you should contact the Law Offices of Sam Walker. For more details or to consult with the Law Offices of Sam Walker regarding your specific situation please use our contact form to schedule a free 15-minute telephonic consultation.