The Pizarro v. Reynoso decision established that courts have equitable power to award attorney's fees against a beneficiary's share of a trust if they litigate in bad faith. Specifically, the court upheld charging fees to trust shares of beneficiaries who filed frivolous petitions challenging a property sale by the trustee. However, the court cannot use equitable powers to make beneficiaries personally liable for fees beyond their trust shares, unless a statute independently authorizes such fees. This affirms courts' ability to protect trusts from improper litigation using beneficiaries' shares as incentive for trustees to defend against bad faith suits.

1. COURTS HAVE THE EQUITABLE POWER TO AWARD ATTORNEY’S
FEES AGAINST A BENEFICIARY’S SHARE OF A TRUST
If you are a beneficiary of a trust, a recent ruling in Pizarro v. Reynoso[i] may impact your share.
In Pizarro, a settlor’s trust nominated his granddaughter to act as trustee. Following his passing,
his granddaughter, in her capacity as trustee, sold real property belonging to the trust to her
mother, the settlor’s daughter. The settlor’s grandson and son filed petitions for relief under
Probate Code section 17200, seeking to set aside the sale of the real property. The petitions were
both denied by the court as frivolous, bad faith litigation, and the grandson, son, and daughter[ii]
were ordered to pay the trustee’s fees and costs from their own beneficial shares of the Trust.
Notably, these fee awards were not based on any specific statutory authority, but instead on the
court’s inherent equitable powers to respond to bad faith litigation: “the court’s broad equitable
powers over trust assets are sufficient to justify an award of attorney fees and costs against any
trust beneficiary who takes an unfounded position and litigates in bad faith, causing the trust to
incur fees and costs.”[iii] Relying on Rudnick v. Rudnick,[iv] the trial court awarded attorney’s
fees and costs against the settlor’s daughter, son, and grandson as charges against their shares of
the Trust, and to the extent that the awarded fees and costs exceeded such shares, they would be
personally liable for the fees and costs incurred.
On appeal, the grandson and daughter argued, among other things, that the award of fees and
costs against them was improper. But the Pizarro court affirmed the lower court’s ruling, holding
that a Court has the inherent equitable power to award a trustee’s attorney’s fees and costs
against the trust shares of a beneficiary, but (absent independent statutory authority) does not
have the equitable power to make a beneficiary personally liable for a trustee’s attorney’s fees
and costs.
This decision is in line with the trend in which courts have found the equitable power to charge
the trustee’s attorney’s fees and costs to a beneficiary’s share of the trust estate when the
beneficiary initiates the litigation in bad faith.[v] This decision continues to be good news for
trustees who find themselves in the position of having to defend the trust against improper
litigation from beneficiaries. The court’s reasoning appears to be that a court’s equitable power
over a trust allows it to protect trust assets for the benefit of those beneficiaries who were not
initiating litigation in bad faith and as an incentive for the trustee to defend the trust against bad
faith litigation.
Of equal significance, however, is the court’s unwillingness to use its equitable powers to charge
a trustee’s fees and costs against a beneficiary’s personal assets. Thus, in cases with relatively
small trust shares, a beneficiary’s share of the Trust may be insufficient to fully satisfy a
judgment for fees and costs, and (absent an independent statutory or contractual basis to award

2. attorney’s fees[vi]) a judgment cannot be enforced against an offending beneficiary’s personal
assets.
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[i] Pizarro v. Reynoso (2017) 10 Cal.App.5th 172.
[ii] Remarkably, the trial court in Pizarro held the daughter liable for fees and costs even though
she did not initiate a petition in this action, but instead offered false testimony at trial: “Nothing
in this analysis . . . requires instigation of an action against the trust by the offending beneficiary
as a prerequisite to charging attorney fees. . . [B]asing one’s assertions on false testimony . . . is,
by definition, taking an unfounded position.”
[iii] Pizarro v. Reynoso (2017) 10 Cal.App.5th at 186.
[iv] Rudnick v. Rudnick (2009) 179 Cal.App.4th 1328.
[v] See, e.g. Rudnick at 1335; Estate of Ivey (1994) 22 Cal.App.4th 873.
[vi] See, e.g., Prob. C. § 17211 (authorizing an award of attorney’s fees in response to a bad faith
opposition to a trustee’s account).