Recently Court of Appeals Case Decision finds that Specific Trust Instructions Authorize Trustee to Use Trust Funds in Defending Terms of the Trust During a Trust Contest

Doolittle v. Exchange Bank

In a matter filed for publication on October 20, 2015, a California Court of Appeal held that a trustee is authorized to use trust funds to defend a trust (and pay agents and professionals who may be required to defend the trust at their going rates) when instructed in writing by a trustee to do so even during an action to contest the validity of the trust.  Unlike past cases limiting a trustee’s ability to use trust funds to defend a contest in Whittlesey v. Aiello (2002) 104 Cal.App.4th 1221 and Terry v. Conlan (2005) 131 Cal.App.4th 1445, the case at issue had an explicit directive to the trustee to defend claims challenging the validity of the amendment and claims for financial elder abuse (against a beneficiary) at the trust’s expense. 

This case will be helpful to estate planning attorneys and potential clients to review as it provides heuristic guidelines on how to draft a trust and how not to draft a trust.