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socrateaser
socrateaser, Attorney
Category: Estate Law
Satisfied Customers: 33485
Experience:  Retired (mostly)
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YIn California, I am a limited partner With my two sister of

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YIn California, I am a limited partner With my two sister of a FLP, my older sister recently became the General Partner. She is also in line as the executor of our widower (2011) father's Family Trust of which she my younger sister and I are equal beneficiaries. He has terminal cancer, is 89, and has been given a few weeks to live; she has been actively involved in all areas of his finances for the past 8-10 months, her daughter-in-law is an estate atty and has been helping her for a "nominal fee" which she refuses to disclose to the beneficiaries. She also refuses to disclose the holdings in the Family Trust and the rest our father's estate.

Can she legally withhold this information from beneficiaries?

Can they legally change the terms of the Family Trust without him initiating the changes but rather convincing him the changes are necessary and/or getting him to sign a power of atty?

They have amended certain clauses, have transferred two of his real Estate assets into the FLP, one being the family home and are now charging him 5000.00 per month rent to rRemain in it, without distributing any of this new income to the limited partners.
They are using this income to upgrade and remodel a second vacation home that was also moved from the Family Trust into the FLP.

Is this common financial management?

Is it a conflict of interest that her daughter in law is "advising" our father yet her advice results in reinforcment of our sister's interest in taking over the Family Trust, having already taken over the FLP? (from which we have no K-1 for 2012 showing the transferred assets yet!)

Anything short of suing I can do to compel her to produce the FLP 2012 K-1? Or to stop her from transferring assets out of the Family Trust with my father still living?

Conversely, can she legally, upon his death, choose NOT to dissolve that trust to distribute equal inheritance to the 3 beneficiaries as my father intends?


BTW &FYI:
The Family Trust has a clause that prevents beneficiaries from suing it upon penalty of losing beneficiary status, and compels the estate rather than the executor/successor to fund a defense against legal action.
Submitted: 1 year ago.
Category: Estate Law
Expert:  socrateaser replied 1 year ago.
Hello. You asked:

Can she legally withhold this information from beneficiaries?


A: As long as your father is still alive, the trust remains revocable, and not subject to beneficiary inspection.

Can they legally change the terms of the Family Trust without him initiating the changes but rather convincing him the changes are necessary and/or getting him to sign a power of atty?

A: They can't, but father can. The trust would have to be revoked and then amended. This is trivially easy to do, as long as father is able to consent in some obvious manner so that the notary will acknowledge his signature (or thumprint).

Is this common financial management?

A: It's really impossible to speculate about this without hearing or reading from the trustee what exactly is in play. There may be legitimate reasons for making last miniute moves before his passing -- on the other hand, most of the time, knee-jerk choices are made without careful thought and frequently result in changes for the worse.

Regardless, it's still specualtion on my part. All you can do is wait until your father passes and then be prepared to fight about things if all of a sudden you find yourselves somehow less vested in his estate plan. You could send a letter flatly stating that you do not think it appropriate for the estate plan to undergo changes at the last moment, and that you intend to carefully scrutinize those changes for any breach of fiduciary that may have occurred. Most lawyers have egos that will cause them to dismiss your comments -- however, you will have at least provided a baseline from before death to show that you know that "something" was taking place, but that you really had no power to stop it until your interest in the estate actually vested.

Is it a conflict of interest that her daughter in law is "advising" our father yet her advice results in reinforcment of our sister's interest in taking over the Family Trust, having already taken over the FLP? (from which we have no K-1 for 2012 showing the transferred assets yet!)

A: If you mean a conflict for the attorney, then no, beause the daughter in law isn't a beneficiary of the trust (at least not as far as I can tell from your statement of facts).

Anything short of suing I can do to compel her to produce the FLP 2012 K-1? Or to stop her from transferring assets out of the Family Trust with my father still living?

A: No. You would have to sue under the theory that you have an unvested future interest which is being misappropriated or mismanaged.

Conversely, can she legally, upon his death, choose NOT to dissolve that trust to distribute equal inheritance to the 3 beneficiaries as my father intends?


A: Depends on the trust instrument provisions. Most revocable trusts distribute at death of the surviving spouse. They don't have to distribute, and you won't know until your father passes what the trust actually provides -- but as soon as he does you are entitled to notice of your right to receive a copy of the trust within 60 days. And, you can always send a letter and demand a copy sooner. Cal. Probate Code 16060 et seq.

Hope this helps.
socrateaser, Attorney
Category: Estate Law
Satisfied Customers: 33485
Experience: Retired (mostly)
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