Beneficiary Rights Attorney in Chatsworth

Beneficiary Rights Attorney in Chatsworth

Chatsworth’s industrial and light-manufacturing base means a lot of estates here are built around a company rather than around real estate or securities. A machine shop, a distribution business, a contractor with equipment and receivables.

For a beneficiary that is the worst kind of asset to watch, because its value is a matter of opinion, its income is a matter of accounting choices, and the person running it is frequently the trustee.

The buy-sell agreement may have decided this before you arrived

The first document to find is not the trust. It is any buy-sell or shareholder agreement the business has. These commonly set a price or a formula for what happens to an owner’s interest on death, and they bind the estate. A formula written years ago, or a stale agreed value nobody updated, can hand a surviving partner the business for a fraction of what it is worth, and the trust cannot override it.

If that is the situation, the beneficiary question changes. It is no longer whether the trustee sold too cheaply. It is whether the trustee was obliged to accept the formula, whether he pressed the point, and whether he obtained an independent valuation before signing anything.

Where there is no buy-sell, valuation is open, and that is where discounts do the work. A minority interest with no control is worth less than its arithmetic share, and an interest nobody can easily sell is discounted again for lack of marketability. Those two adjustments can take a third or more off the headline number. They are legitimate. They are also the lever a trustee buying out the other beneficiaries has every reason to pull hard.

What the account has to show about a business

§ 16063 requires the account to show receipts, disbursements, assets on hand and the trustee’s compensation. For an operating business that means distributions from the company to the trust are receipts, and money the trust puts in is a disbursement. A trustee who nets it out and reports one figure has not accounted.

§ 16061 is the sharper tool while the business is running. On reasonable request the trustee must report information about the administration relevant to your interest. Ask for the valuation and the valuer’s credentials, the discounts applied and the basis for them, the company’s financial statements for the periods in question, and any offers received. Ask for the buy-sell agreement by name.

Watch the trustee’s own compensation from two directions. He may be taking a trustee’s fee from the trust and a salary from the company at the same time. Both are capable of being reasonable. Only one of them shows up in the trust accounting.

What has to happen before a court will order an accounting

§ 17200(b)(7)(C) requires that the trustee failed to submit a requested account within 60 days after your written request and that no account was made in the six months preceding it. Both conditions. § 17200(b)(7)(B) applies the same test to information.

With an operating business, timing matters more than in most files. A company loses value while its ownership is unresolved, so a beneficiary who waits two years to ask may be arguing about a business that is worth materially less than the one in dispute.

Where a Chatsworth trust petition is heard

Chatsworth is in Los Angeles County, which centralises probate and trust matters at the Stanley Mosk Courthouse, 111 N. Hill Street in downtown Los Angeles. There is no Valley probate court, so the Chatsworth courthouse does not take these.

Venue for a petition about the internal affairs of a trust follows where the trust is administered rather than where the business operates. If the trustee runs the trust from elsewhere, that can move the correct court.

Questions Chatsworth beneficiaries ask

My brother runs the company and is also the trustee. Can he buy out the rest of us? Often yes, if the trust or a buy-sell agreement permits it. What he cannot do is set the price without showing his work. Ask for the valuation, the valuer’s credentials, the discounts applied and the reasoning behind them. § 16063 requires the account to show how assets were valued.

What is a lack-of-marketability discount and should I worry about it? It reduces the value of an interest nobody can easily sell, and it is a real and accepted adjustment. Worry about its size rather than its existence. Combined with a minority discount it can take a third or more off, and the person applying it is often the person buying.

There is a buy-sell agreement with a price in it from years ago. Are we stuck? Possibly. These agreements generally bind the estate and the trust cannot simply override them. The questions become whether it was validly triggered, whether its terms were followed, and whether the trustee did anything to protect the beneficiaries before accepting the number.

The trustee takes a salary from the business and a fee from the trust. Is that allowed? Both can be legitimate. Only the trustee’s fee will appear in the trust accounting, so the salary is something you have to ask about under § 16061. The question is whether the total is reasonable for the work, and whether the arrangement was disclosed.

Do I file in Chatsworth? No. Los Angeles County hears probate and trust matters downtown at the Stanley Mosk Courthouse, 111 N. Hill Street. There is no Valley probate court.

Talk to Eric or call 805-244-5291. I serve Chatsworth and all of Los Angeles County.

For the statewide rules, see beneficiary rights in a California trust. If the business is the whole estate, business succession covers the planning side. If the trustee will not account, see trustee accounting requirements.