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LegalGems
LegalGems, Attorney
Category: Estate Law
Satisfied Customers: 7451
Experience:  Private Practice; Elder Law Attorney; Estate Planning; Attorney Mentor
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My mother passed on 11/26/2015 and it will be one year since

Customer Question

My mother passed on 11/26/2015 and it will be one year since her passing on 11/26/2016. I am a co-executor/co-trustee of her irrevocable living trust which is located in California and think that I will have to sue my co-trustee for trust fraud. Am I facing any statute of limitations for filing a suit since the one year anniversary is coming up?
Submitted: 2 months ago.
Category: Estate Law
Expert:  Richard replied 2 months ago.

Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

Customer: replied 2 months ago.
Ok, are you familiar with California probate law?
Expert:  Richard replied 2 months ago.

Thanks for following up. I am, but since it's a concern for you and to relieve that concern, I am going to opt out so a California expert can timely provide you the information you seek. Please do not respond to this post as it will only slow the process of such an expert picking up your question. Take care.

Expert:  LegalGems replied 2 months ago.

Thank you for your patience; the statute of limitations for estates is 3 years; here is the relevant probate code;

16460. (a) Unless a claim is previously barred by adjudication,
consent, limitation, or otherwise:
(1) If a beneficiary has received an interim or final account in
writing, or other written report, that adequately discloses the
existence of a claim against the trustee for breach of trust, the
claim is barred as to that beneficiary unless a proceeding to assert
the claim is commenced within three years after receipt of the
account or report. An account or report adequately discloses
existence of a claim if it provides sufficient information so that
the beneficiary knows of the claim or reasonably should have inquired
into the existence of the claim.
(2) If an interim or final account in writing or other written
report does not adequately disclose the existence of a claim against
the trustee for breach of trust or if a beneficiary does not receive
any written account or report, the claim is barred as to that
beneficiary unless a proceeding to assert the claim is commenced
within three years after the beneficiary discovered, or reasonably
should have discovered, the subject of the claim.
(b) For the purpose of subdivision (a), a beneficiary is deemed to
have received an account or report, as follows:
(1) In the case of an adult who is reasonably capable of
understanding the account or report, if it is received by the adult
personally.
(2) In the case of an adult who is not reasonably capable of
understanding the account or report, if it is received by the person'
s legal representative, including a guardian ad litem or other person
appointed for this purpose.
(3) In the case of a minor, if it is received by the minor's
guardian or, if the minor does not have a guardian, if it is received
by the minor's parent so long as the parent does not have a conflict
of interest.
(c) A written account or report under this section may, but need
not, satisfy the requirements of Section 16061 or 16063 or any other
provision.

However, the time period can be shortened by the trustee providing an accounting, along with a statement releasing the trustee from liability:


16461. (a) Except as provided in subdivision (b), (c), or (d), the
trustee can be relieved of liability for breach of trust by
provisions in the trust instrument.
(b) A provision in the trust instrument is not effective to
relieve the trustee of liability (1) for breach of trust committed
intentionally, with gross negligence, in bad faith, or with reckless
indifference to the interest of the beneficiary, or (2) for any
profit that the trustee derives from a breach of trust.
(c) Subject to subdivision (b), a provision in a trust instrument
that releases the trustee from liability if a beneficiary fails to
object to an item in an interim or final account or other written
report within a specified time period is effective only if all of the
following conditions are met:
(1) The account or report sets forth the item.
(2) The period specified in the trust instrument for the
beneficiary to object is not less than 180 days, or the trustee
elects to follow the procedure provided in subdivision (d).
(3) Written notice in 12-point boldface type is provided to a
beneficiary with the account or report in the following form:
NOTICE TO BENEFICIARIES
YOU HAVE [insert "180 days" or the period specified in the trust
instrument, whichever is longer] FROM YOUR RECEIPT OF THIS ACCOUNT OR
REPORT TO MAKE AN OBJECTION TO ANY ITEM SET FORTH IN THIS ACCOUNT OR
REPORT. ANY OBJECTION YOU MAKE MUST BE IN WRITING; IT MUST BE
DELIVERED TO THE TRUSTEE WITHIN THE PERIOD STATED ABOVE; AND IT MUST
STATE YOUR OBJECTION. YOUR FAILURE TO DELIVER A WRITTEN OBJECTION TO
THE TRUSTEE WITHIN THE PERIOD STATED ABOVE WILL PERMANENTLY PREVENT
YOU FROM LATER ASSERTING THIS OBJECTION AGAINST THE TRUSTEE. IF YOU
DO MAKE AN OBJECTION TO THE TRUSTEE, THE THREE-YEAR PERIOD PROVIDED
IN SECTION 16460 OF THE PROBATE CODE FOR COMMENCEMENT OF LITIGATION
WILL APPLY TO CLAIMS BASED ON YOUR OBJECTION AND WILL BEGIN TO RUN ON
THE DATE THAT YOU RECEIVE THIS ACCOUNT OR REPORT.(d) A provision in a trust instrument that provides for a period
less than 180 days to object to an item in an account or report shall
be ineffective to release the trustee from liability. A trustee of a
trust created by an instrument with an ineffective period may elect
to be governed by the provisions of subdivision (c) by complying with
the requirements of subdivision (c), except that "180 days" shall be
substituted in the notice form for the ineffective period.
(e) Subject to subdivision (b), a beneficiary who fails to object
in writing to an account or report that complies with the
requirements of subdivision (c) within the specified, valid period
shall be barred from asserting any claim against the trustee
regarding an item that is adequately disclosed in the account or
report. An item is adequately disclosed if the disclosure regarding
the item meets the requirements of paragraph (1) of subdivision (a)
of Section 16460.
(f) Except as provided in subdivision (a) of Section 16460, the
trustee may not be released from liability as to any claim based on a
written objection made by a beneficiary if the objection is
delivered to the trustee within the specified, effective period. If a
beneficiary has filed a written objection to an account or report
that complies with the requirements of subdivision (c) within the
specified, valid period that concerns an item that affects any other
beneficiary of the trust, any affected beneficiary may join in the
objection anytime within the specified, valid period or while the
resolution of the objection is pending, whichever is later. This
section is not intended to establish a class of beneficiaries for
actions on an account and report or provide that the action of one
beneficiary is for the benefit of all beneficiaries. This section
does not create a duty for any trustee to notify beneficiaries of
objections or resolution of objections.
(g) Provided that a beneficiary has filed a written objection to
an account or report that complies with the requirements of
subdivision (c) within the specified, valid period, a supplemental
written objection may be delivered in the same manner as the
objection not later than 180 days after the receipt of the account or
report or no later than the period specified in the trust
instrument, whichever is longer.
(h) Compliance with subdivision (c) excuses compliance with
paragraph (6) of subdivision (a) of Section 16063 for the account or
report to which that notice relates.
(i) Subject to subdivision (b), if proper notice has been given
and a beneficiary has not made a timely objection, the trustee is not
liable for any other claims adequately disclosed by any item in the
account or report.
(j) Subdivisions (c) to (i), inclusive, apply to all accounts and
reports submitted after the effective date of the act adding these
subdivisions.

These probate codes are consistent with CCP 338(d) which states that actions for fraud must be commenced within 3 years from the date of discovery; but again, the time period can be shortened if the requirements of PC 16461 are met.

The co-trustee must act promptly or the co-trustee can be liable for acts of the co-trustee pursuant to PC 16013.

That statute is here:

16013. If a trust has more than one trustee, each trustee has a
duty to do the following:
(a) To participate in the administration of the trust.
(b) To take reasonable steps to prevent a cotrustee from
committing a breach of trust or to compel a cotrustee to redress a
breach of trust.
Of great importance is the doctrine of laches- basically, it can shorten the statute of limitations; it is a legal theory based on concepts of equity, justice, fairness. If the court finds that a party unreasonably delayed in acting, once the fraud was discovered, the court can invoke laches and deem that too much time has passed. The court is reluctant to do this when it involves wrongdoing by the other party (unclean hands) but they do have the ability to invoke this doctrine as it is discretionary; of great importance is the possible liability of the co-trustee for not acting once wrongdoing is suspected, given the affirmative statutory duty to take action to prevent fraud, coupled with the fiduciary duty owed by the trustee. Here is a report that explains the history of the statute of limitations as it relates to trust fraud. Since the co-trustee can be held liable for inaction it is best to meet with an attorney and discuss the merits of the case, to decide if one needs to file immediately to avoid potential liability. http://www.calbar.ca.gov/Public/LawyerReferralServicesLRS.aspxThey also can refer to an estate law attorney that is certified in estate law issues. Further questions? Please post here to continue the chat. Satisfied? Kindly rate positively so I receive credit for assisting you. I hope that you feel I have earned 5 stars *****as I strive to provide my customers with great service.(no additional charges are incurred). Information provided is for educational purposes only. Consultation with a personal attorney is always recommended so your particular facts may be considered. Thank you and take care.
Expert:  LegalGems replied 2 months ago.

Hello again; just checking in to see how things worked out;
if you have further questions please don't hesitate to reach out to me here on Just Answer.
Thanks!

Expert:  LegalGems replied 2 months ago.

I hope the above information has been helpful. Thank you for using JA!

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