A trustee who successfully defends a beneficiary’s lawsuit may have spent substantial sums on counsel. Whether those fees can be paid from the trust, charged against the beneficiary’s share, or recovered personally from the beneficiary depends on why the expenses were incurred and the legal authority for shifting them. The California Court of Appeal addressed an important part of that distinction in McKinley v. Harris (Oct. 13, 2026, G066032), a published decision from the Fourth District, Division Three.
A Dispute Over Two Trust-Owned Hotels
The McKinley Family Living Trust held two hotels in San Clemente. Three siblings were equal beneficiaries. Andrew McKinley filed a Probate Code section 850 petition concerning the trustees’ administration of the properties and their plans to sell them. He named Erin Harris both as a trustee and individually, alleging, among other things, that she stood to benefit personally from the proposed sale. Those allegations were disputed; the appellate opinion did not adjudicate their truth.
McKinley eventually dismissed his petition. Harris and her co-trustee then sought approximately $656,929 in fees and costs incurred in their fiduciary capacities. Separately, Harris sought $83,434.50 in attorney fees and $238.60 in costs for defending herself individually. The probate court denied both fee requests, although it awarded Harris her claimed costs in her individual capacity. Only the denial of her individual attorney-fee request was before the Court of Appeal.
What the Court Decided
Harris argued that the probate court’s equitable powers permitted it to charge her personal defense fees against McKinley’s share of the trust because his litigation was allegedly frivolous and brought in bad faith. The Court of Appeal rejected that theory and affirmed the denial of attorney fees.
California generally follows the American Rule: each litigant pays its own attorney fees unless a statute, contract, or recognized exception supplies authority for an award. Probate Code section 1002 permits probate courts to allocate costs as justice requires, but it does not itself authorize an award of attorney fees. Nor do a probate court’s general equitable powers supply an independent basis to shift fees incurred solely to protect a trustee’s personal interests.
The opinion does not hold that a trustee must personally bear every expense associated with litigation. Its narrower holding concerns a separate personal defense for which Harris did not establish a benefit to the trust or another source of fee entitlement.
When Defense Fees May Benefit the Trust
The court distinguished decisions allowing fees incurred for trust administration or protection to be reimbursed, and, in appropriate circumstances, allocated against the interest of a beneficiary whose bad-faith litigation caused those expenses.
In Rudnick v. Rudnick (2009) 179 Cal.App.4th 1328, fees incurred by a trustee for the trust’s benefit could be charged against a beneficiary’s future distributions after unfounded bad-faith litigation. In Hollaway v. Edwards (1998) 68 Cal.App.4th 94, defending allegations against a trustee also protected the trust by addressing questions about the trustee’s fitness to administer it. Powell v. Tagami (2018) 26 Cal.App.5th 219 similarly involved advice to a trustee that incidentally benefited the trust.
Those authorities did not assist Harris because she sought reimbursement for a distinct personal defense, with separate counsel, without asserting that her individual representation benefited the trust. The Court of Appeal emphasized that equitable authority to protect a trust estate is different from authority to protect a trustee’s personal assets at another party’s expense.
The Separate Fiduciary Fee Request Remains Undecided
The trustees’ much larger request, approximately $656,929 in fees and costs, was not the subject of the appeal. The probate court observed that reimbursement from trust property might be available under Probate Code sections 15684 and 16243, but stated that the trustees would need to proceed by petition rather than a postjudgment fee motion. The appellate court did not decide the correctness of that ruling or whether the requested fiduciary expenses were ultimately recoverable.
That limitation matters. A trustee seeking payment from trust assets should identify which legal services advanced trust administration, what authority permits reimbursement, whether the amounts are reasonable, and which procedure applies. If the trustee also faces individual claims, counsel should distinguish the work performed for the trust from work performed solely for personal protection. A common set of facts does not automatically make every defense expense chargeable to the trust.
Practical Considerations for Trustees and Beneficiaries
For trustees, McKinley illustrates the importance of addressing fee allocation at the outset of litigation. Engagement agreements, billing records, the trust instrument, and the capacity in which each claim is defended can become decisive when reimbursement is later requested. Trustees should not assume that dismissal of a beneficiary’s petition automatically entitles them to recover personal attorney fees.
For beneficiaries, the decision does not mean that pursuing trust litigation carries no financial risk. A beneficiary who brings an unfounded proceeding in bad faith may, under the circumstances recognized in Rudnick and related cases, face an allocation of properly recoverable trust-defense fees against that beneficiary’s interest. Whether such relief is available depends on the actual nature of the litigation, the benefit to the trust, and the applicable authority.
The result in McKinley is therefore limited but useful: success in defending a personal claim against a trustee does not, standing alone, authorize equitable fee shifting. Trust-related reimbursement and beneficiary-specific allocation require a separate analysis.
Elpis Law represents clients in California trust and civil litigation, including disputes concerning fiduciary duties, trustee conduct, trust assets, and beneficiary rights. For advice about a particular dispute, contact our office to arrange a consultation.
Legal Authorities
- McKinley v. Harris (Oct. 13, 2026, G066032), Cal. Ct. App., 4th Dist., Div. 3, published — official opinion
- Rudnick v. Rudnick (2009) 179 Cal.App.4th 1328
- Hollaway v. Edwards (1998) 68 Cal.App.4th 94
- Probate Code § 850 — official text
- Probate Code § 1002 — official text
- Probate Code §§ 15684, 16243 — official text (§ 15684)
Related practice areas: Trusts and Estates