…Judge says what!??

I recently had a case where my client was a beneficiary of her father’s  &  stepmother’s joint trust.   After father died, the stepmother revoked her half of the trust thus cutting in half what my client would get.  At that point in time stepmother was the trustee of both “halves” of the trust and owed all beneficiaries a fiduciary duty to act reasonably and in good faith treating all beneficiaries equally and fairly.  Thus, stepmother owed my client a fiduciary duty.  Also, the trust says that stepmother could revoke if she thought it best (basically).   So, what takes precedence?…the duty to treat a beneficiary fairly and in good faith, or the right to revoke simply because the trust says you can.  One thing is for sure in law: the fiduciary duty the trustee owes the beneficiary DOES NOT go away no matter what the trust says.   This is manifest in law.  OK, so what if we add to the mix that the available evidence strongly suggests that stepmother revoked her half just to screw my client.  That would be bad faith, right?…A breach of the duty to treat all beneficiaries fairly and in good faith, right?…completely irrespective of what the trust said, right??   I researched the hell out of this and the law is unanimous and clear —  basically trustees can do whatever they want within reason (even make mistakes and misjudgments) so long as they do it in good faith, i.e., not for bad faith purposes.  The law is very clear on that.  Trustees get latitude but they must uphold their fiduciary duty and act in good faith.  Such is in case law, statutory law, and I think this resonates in common sense.  HOWEVER, my judge ruled that stepmother can revoke — “even in bad faith” — simply because the trust said she can revoke if she wants to.  On that basis I never even got to present my witnesses and evidence that would hopefully demonstrate bad faith.  Case over, on the spot, based on one very cockeyed ruling IMHO.  What say thee enlightened masses?  Good ruling or bad ruling?

About Edward B. Batista

The Law Office Of Edward B. Batista. Offices in Sacramento and Nevada City. Specializing in estate litigation, estate planning, wills/trusts, probate, contracts and real estate.
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