Can a Trustee Recover Attorney Fees From a Beneficiary? McKinley v. Harris Draws the Line at the Trustee's Own Pocket

A beneficiary petitions the probate court, accuses his sister of mismanaging the family trust, records a lis pendens on two hotels, and names her twice: once as trustee and once as an individual. Five months later he drops the whole thing. She has paid two sets of lawyers, one to defend the trust and one to defend herself. Who pays for that?

On October 13, 2026, the Court of Appeal answered half of that question in a way that surprises a lot of trustees. In McKinley v. Harris (Oct. 13, 2026, G066032, as modified Oct. 14, 2026), the Fourth Appellate District, Division Three, held that a trustee sued in her individual capacity cannot recover the attorney fees she personally incurred by invoking the probate court's equitable powers. If no statute or contract shifts those fees, she pays them herself, even if the petition against her was unfounded. The opinion is certified for publication.

The decision does not take away the fee tools trustees actually have. It explains which hat those tools fit. That distinction between the trustee's two capacities is the whole case, and it is worth understanding before anyone files, or defends, a petition under Probate Code section 850.

The two hats a trustee wears in litigation

Petitions against a trustee routinely name the trustee in two capacities. Claims in the trustee capacity seek relief from the trust: an accounting, a surcharge, removal, an order to distribute. Claims in the individual capacity reach the trustee's own assets, which is where the double damages penalty in Probate Code section 859 lands when a court finds property was taken in bad faith. We explained how section 850 petitions and the section 859 penalty work in our article on recovering stolen trust property.

Fees follow the same split. A trustee who hires counsel to protect the trust can pay that counsel from trust assets. Probate Code section 16243 gives the trustee power to pay "expenses incurred in the collection, care, administration, and protection of the trust," and section 15684 entitles the trustee to repayment from trust property for expenditures "properly incurred in the administration of the trust." The court in McKinley quoted an older decision, Hollaway v. Edwards (1998) 68 Cal.App.4th 94, for the point that the Probate Code "is studded with provisions authorizing the trustee to hire and pay (or seek reimbursement for having paid) attorneys to assist in trust administration."

A trustee who hires separate counsel to defend herself personally is in a different position. Those fees are not an expense of administering the trust. They are her own litigation costs, and the question in McKinley was whether equity lets the probate court shift them to the beneficiary who caused them.

What happened in McKinley

The McKinley Family Living Trust, dated July 9, 2010, held two hotels in San Clemente. Erin Harris and her husband Scott were the trustees. Harris and her two brothers, Andrew and Marcus McKinley, were the sole, equal beneficiaries.

In May 2024, Andrew filed a verified petition under section 850. He alleged the trust required the hotels to be allocated into separate shares for each beneficiary, that the trustees were instead delaying administration and moving to liquidate the properties, and that he and his wife, who had managed the hotels for more than two decades, were about to be terminated as managers. He asked for an order transferring a one third interest in each hotel to his own trust and for double the value of that share under section 859. He named Harris and Scott as trustees, and Harris again as an individual. He recorded a lis pendens on each hotel. His first amended petition in August 2024 did the same.

The trustees objected and moved to expunge the lis pendens, submitting a declaration that a buyer had offered $15.5 million for the hotels and that the petition and lis pendens were obstructing the sale. In mid September 2024 Andrew withdrew both lis pendens, saying he was relying on the trustees' representations about the offer and reserving the right to refile if the sale did not go through as described. In October 2024 he asked to dismiss his petition without prejudice. The probate court granted the request in December 2024, at a hearing he did not attend, and entered judgment for the trustees and for Harris individually.

In February 2025 came two fee motions. The trustees, through their counsel, sought $656,929.02 in fees and costs incurred on behalf of the trust, and asked that the amount be charged against Andrew's share because the petition was brought in bad faith. Harris, through separate counsel, sought $83,434.50 in fees and $238.60 in costs she had personally incurred responding to the claims against her individually. Both motions rested on the probate court's equitable powers. The only statute Harris cited was Probate Code section 1002, which lets the court order "costs" to be paid by any party or out of the estate "as justice may require." She did not claim her personal defense had benefited the trust in any way.

The probate court denied both fee requests. On the trustees' motion, it said the trustees might be entitled to reimbursement from trust property under sections 15684 and 16243, and that the court would have discretion to charge such fees against Andrew's share, but that a request of that kind had to be made "by petition," not by a motion for fees after judgment. That ruling was not appealed. On Harris's individual motion, the court granted her costs under section 1002 and denied the fees, reasoning that section 1002 "pertains only to costs, not attorney's fees" and that California probate courts "do not have equitable power to award attorney's fees to a prevailing party in a trust proceeding." Harris appealed that order alone.

The American rule applies in probate court

The Court of Appeal affirmed, reviewing the question de novo. Its starting point was that probate proceedings are statutory. Quoting Bruno v. Hopkins (2022) 79 Cal.App.5th 801, the court said the probate court "has no other powers than those given by statute and such incidental powers as pertain to it and enable the court to exercise the jurisdiction conferred upon it." Where the Probate Code is silent on a procedural point, the Code of Civil Procedure fills the gap, and it has long been settled that the general fee rule in Code of Civil Procedure section 1021 applies in probate. Section 1021 is the California version of the American rule: each side pays its own lawyer unless a statute or an agreement says otherwise. We covered that rule in the ordinary civil setting in our article on recovering attorney fees in litigation.

The court then listed what Harris had not relied on. The Probate Code contains several fee shifting provisions, and the opinion names some: section 859, section 2653, section 11003, section 15642, subdivision (d), and section 17211, subdivision (a). Harris did not argue that any of them applied to her individual motion. She appeared to have abandoned section 1002, which governs only costs. She did not invoke Code of Civil Procedure section 128.5, the statute that authorizes fee awards for bad faith tactics that are frivolous or intended solely to cause delay. And she did not argue that the trust instrument or any agreement entitled her to fees. Her whole case was that the probate court had inherent equitable authority to award them.

What the equitable fee power actually covers

The court agreed that the probate court has real equitable powers. It quoted the Supreme Court's decision in Barefoot v. Jennings (2020) 8 Cal.5th 822: although the probate court "has no general equity jurisdiction, it does have the power to apply equitable and legal principles in order to assist its function as a probate court." The question was what that power reaches when the subject is fees.

The answer, drawn from Pizarro v. Reynoso (2017) 10 Cal.App.5th 172, is that the probate court's "equitable power includes the power to charge attorney fees against a beneficiary's share of the trust if that beneficiary, in bad faith, brings an unfounded proceeding against the trust." The italics in the opinion fall on the last three words. Against the trust.

The court walked through the cases Harris relied on and found the same limit in each:

• Rudnick v. Rudnick (2009) 179 Cal.App.4th 1328. The trustee incurred the fees as trustee, for the trust's benefit, under a trust instrument that made all expenses of administering or protecting the trust a charge on the trust estate. The appellate court affirmed an order charging those fees against the bad faith beneficiaries' future distributions rather than against the trust as a whole, tracing the rule back to Conley v. Waite (1933) 134 Cal.App. 505, which allowed a trustee's fees in defending an unfounded suit by a beneficiary to "be made a charge against the interest in the estate of the party causing the litigation." Harris called Rudnick squarely on point. The court said it was not, because Harris was claiming fees for a suit against her personally, not against the trust.
• Estate of Ivey (1994) 22 Cal.App.4th 873. Held that a probate court has equitable power to charge one beneficiary's share of a trust for frivolous litigation against the trust. Same limit.
• Hollaway v. Edwards, above. Fees were properly awarded to a trustee who defended herself because her personal defense "also benefited the trust by eliminating charges raising serious questions about whether she had and could continue to administer the trust properly." The fees were recoverable because of the benefit to the trust, not in spite of its absence.
• Powell v. Tagami (2018) 26 Cal.App.5th 219. Affirmed fees for a trustee who retained a personal attorney to advise her on trust administration, because that advice incidentally benefited the trust.

None of those decisions, the court said, "holds that a trustee sued in her individual capacity may recover attorney fees incurred solely in her own defense pursuant to equitable powers of the probate court." The probate court "has broad equitable powers to protect the trust estate," quoting Bruno again, "not the trustee's personal assets." Harris's personal assets were the only thing at issue in her motion, so the probate court "lacked authority under equity to impose attorney fees and costs." Because she offered no other source of authority, the denial was correct. The order was affirmed with costs on appeal to Andrew.

Why the capacity split decided the case

Read quickly, McKinley looks like a loss for trustees. Read carefully, it is a map. Every route to fee recovery the court discussed runs through the trust: fees incurred to protect the trust are payable from trust property, and when a beneficiary's proceeding against the trust was unfounded and brought in bad faith, equity lets the court move that cost off the other beneficiaries and onto the share of the one who caused it. The beneficiary who sues the trust and loses badly can still end up paying the trustee's lawyers, out of his inheritance.

What equity does not do is reach into the trustee's own pocket and refill it. Fees incurred solely for the trustee's personal defense, by separate counsel, with no benefit to the trust, are governed by the American rule like any other civil litigant's fees. The source of recovery has to be a statute or a contract.

That makes the structure of the fee request matter as much as the merits. In McKinley, the trustees and Harris individually used different counsel and filed separate motions, which made the capacity split unmistakable. The court noted that fact. A trustee whose personal defense genuinely overlapped with the defense of the trust, as in Hollaway, would have been arguing a different case, one about benefit to the trust rather than about the trustee's personal exposure.

The fee statutes that do exist, and what they require

The opinion's list of Probate Code fee provisions is a useful checklist, because each one is narrow:

1. Section 17211, subdivision (a). If a beneficiary contests the trustee's account and the court finds the contest was "without reasonable cause and in bad faith," the court may award the trustee's compensation, costs, and attorney fees incurred to defend the account, charged against the beneficiary's interest in the trust, with the contestant personally liable for any shortfall. Subdivision (b) runs the other way: a trustee whose opposition to an account contest was without reasonable cause and in bad faith can be ordered to pay the contestant's fees, charged against the trustee's compensation or interest in the trust. Both are limited to account contests.
2. Section 15642, subdivision (d). If a petition to remove the trustee was filed in bad faith and removal would be contrary to the settlor's intent, the court may order the petitioner to bear all or part of the costs, including reasonable attorney fees. Limited to removal petitions, which we discuss in our article on removing a trustee in California.
3. Section 859. Runs in favor of the party recovering property, not the trustee defending against the claim, and fees under it are discretionary.
4. Code of Civil Procedure section 128.5. Authorizes an award of reasonable expenses, including attorney fees, caused by "actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay." It has its own notice and procedural requirements, including a separate motion and, for pleadings that can be withdrawn, a 21 day safe harbor. Harris did not invoke it, and the court did not decide whether it would have helped her.

A section 850 petition to transfer trust property to a beneficiary, dismissed before any ruling on the merits, is not an account contest and not a removal petition. Unless the trust instrument itself contains a fee provision, a trustee sued personally in that posture is left with section 128.5 or nothing. McKinley did not hold that section 128.5 was unavailable. It held only that equity was not a substitute for it.

What the trial court said about procedure

One part of the record that was not before the Court of Appeal deserves attention anyway. In denying the trustees' $656,929.02 motion, the probate court did not say the trustees could never recover their fees. It said they "might be entitled to reimbursement for attorney's fees out of trust property" under sections 15684 and 16243, that the court would have discretion to charge those fees against Andrew's share, and that the request had to come by petition rather than by a postjudgment fee motion. The trustees did not appeal that order, so the Court of Appeal expressed no view on it.

Whether or not that procedural ruling is right, it is a warning. A trustee who wants a bad faith beneficiary to bear the trust's litigation expense should expect to prove it in a proceeding built for that purpose, with evidence of what the fees were for and why the petition was unfounded, rather than by tacking a fee motion onto a dismissal.

Harris had also argued that an Arizona choice of law clause in the trust called for Arizona fee statutes. The probate court applied California law to both motions, and she did not challenge that ruling on appeal.

What to do

1. If you are a trustee who has been sued in both capacities. Decide early whether separate personal counsel is necessary, and if it is, understand that those fees are probably yours unless a statute or the trust instrument says otherwise. Where the defense of the trust and your personal defense overlap, document the benefit to the trust, because Hollaway and Powell turned on that showing. Keep the billing records separated by capacity so a later reimbursement request from trust property is clean.
2. If a beneficiary's petition against the trust was baseless. The remedy is a petition for reimbursement of the trust's fees from trust property, paired with a request that the court charge them against the petitioning beneficiary's share under Rudnick and Pizarro. Bad faith is the gate, and it has to be proven. If the petition was an account contest or a removal petition, sections 17211 and 15642 supply a statutory basis as well.
3. If the petition was aimed at you personally and was frivolous. Look at Code of Civil Procedure section 128.5 and its safe harbor procedure while the pleading is still pending. It cannot be raised for the first time after a dismissal with the same effect, and the court in McKinley noted that Harris never tried it.
4. If you are a beneficiary considering a section 850 petition. McKinley shows the fee exposure is asymmetric. A petition that challenges the trust and is found to be unfounded and in bad faith can be charged against your inheritance, and an account contest or removal petition carries statutory fee risk of its own. Costs, as opposed to fees, can be ordered against any party under section 1002, and they were here. Build the record before filing, and if you record a lis pendens, remember that the trustees can move to expunge it, as we explain in our article on lis pendens in trust disputes.
5. If you are drafting or amending a trust. Nothing in McKinley prevents a settlor from including a fee provision that addresses litigation between trustees and beneficiaries. The court noted that Harris did not argue the trust authorized fees to her individually. A clause that does so changes the analysis from equity to contract.

The underlying dispute in McKinley, over whether trustees who sell trust property rather than distribute it in kind are acting within their authority, was never decided; the petition was dismissed before the merits. The duties a trustee owes when making that kind of decision are covered in our article on the fiduciary duties a trustee owes to beneficiaries.

Talk to a Los Angeles trust litigation attorney

The Darvish Firm's Los Angeles trust and estate litigation attorneys represent trustees defending petitions brought in both capacities, beneficiaries pursuing section 850 and surcharge claims, and parties on either side of a fee dispute in the probate court. Call (310) 677-3512 or request a consultation.

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Every case depends on its facts. Consult an attorney about your specific situation.