MCLE SELF-STUDY ARTICLE TRUSTEE’S OBLIGATION TO MAINTAIN IMPARTIALITY IN TRUST LITIGATION: ZAHNLEUTER v. MUELLER (2023) 88 CAL.APP.5TH 1294

Written by Denise E. Chambliss, Esq.^* and Clare Capaccioli Velasquez, Esq.^*

I. SYNOPSIS

In trust litigation, navigating the boundary between a trustee’s right and duty to defend the trust, and the contrasting duty to remain impartial in disputes as to who is the rightful trust beneficiary, can prove to be complex and complicated.

This tension was at issue in the case of Zahnleuter v. Mueller (2023) 88 Cal.App.5th 1294 ("Zahnleuter"). In Zahnleuter, the trustee was surcharged in the amount of attorney’s fees he paid from the trust in connection with a dispute over the validity of a trust amendment.⁰¹ The court held that Thomas Mueller ("the Trustee") incurred attorney fees to benefit the interests of his two children, Julie and Amy, not the interests of the trust estate.⁰² In Zahnleuter, the court reaffirmed that, for a trustee to avoid personal liability and a surcharge, the attorney’s fee expenditures from the trust must benefit the trust rather than fund the trustee’s engagement in a dispute over the identity of the proper beneficiaries.⁰³