Understanding the Common Fund Doctrine in California Trust and Estate Litigation
In California trust and estate litigation, many legal questions revolve around fairness—not just in how an estate is divided, but in who pays for the legal work it takes to protect everyone’s rights. One principle that often comes into play is the common fund doctrine. While not widely understood by the public, this legal concept plays an important role in disputes where one party takes legal action that ultimately benefits others as well.
At Trust Law Partners, we often encounter cases where a client stands up against a bad trustee, recovers assets for the trust, or prevents a fraudulent amendment from changing how an estate is distributed. These actions don’t just protect our client—they can help all of the beneficiaries. When that happens, the question becomes: should our client bear the full cost of the legal fees, or can those fees be paid from the trust or estate itself?
The common fund doctrine can provide the answer, but its application is specific, strategic, and not guaranteed. This blog explains what it is, how it works, and when it might apply in a California trust or estate case.
What Is the Common Fund Doctrine?
The common fund doctrine is an equitable principle that allows a party who successfully recovers, preserves, or increases a fund for the benefit of others to be reimbursed from that fund. It prevents what courts call “free riders”—people who benefit from a successful legal effort without contributing to the costs it took to get there.
The idea is rooted in basic fairness. If one party takes on the risk and expense of litigation and their efforts create a financial benefit for others, the court can require that the legal fees be paid from the shared fund, rather than leaving one person to pay the cost for everyone else’s gain.
This doctrine is commonly used in class action lawsuits, insurance litigation, and shareholder derivative suits. But it also applies—though more narrowly—in the trust and estate world.
How Does It Apply to Trust and Estate Cases?
In trust and estate litigation, the common fund doctrine can come into play when a beneficiary, heir, or interested party brings a legal action that increases the value of the estate or trust for the benefit of more than just themselves.
Examples include:
- Removing a dishonest or incompetent trustee, resulting in better financial management that protects all beneficiaries.
- Recovering stolen or misappropriated assets, which are then returned to the estate or trust.
- Successfully challenging a forged or invalid trust amendment that would have unfairly diverted money from the rightful heirs.
In these situations, courts may find that the petitioner didn’t just act for personal gain—they helped everyone with a stake in the estate. If that’s the case, they may award attorney’s fees from the estate or trust itself, instead of requiring the petitioner to pay those fees out of pocket.
However, the doctrine does not apply to every case, and courts apply it cautiously. It is most likely to be considered when the facts clearly show that the litigation resulted in a financial benefit that others would not have received otherwise.
Key California Cases That Shape the Doctrine
Several California appellate decisions provide guidance on how and when the common fund doctrine applies in probate and trust disputes.
One of the foundational cases is Estate of Stauffer (1959), in which the California Supreme Court allowed a petitioner to recover attorney’s fees from an estate after they successfully challenged a provision in a will that would have improperly disinherited certain beneficiaries. The Court reasoned that the litigation preserved the proper distribution of assets for multiple parties, and the petitioner’s actions benefited the group as a whole.
In Whittlesey v. Aiello (2002), the Court of Appeal permitted the recovery of attorney’s fees after a beneficiary successfully removed a trustee who had mismanaged the trust. Again, the result of the litigation was a direct benefit to all beneficiaries, and the court recognized that allowing reimbursement from the trust was appropriate.
In contrast, when litigation is mainly adversarial—where one beneficiary is trying to increase their own share at the expense of others—the common fund doctrine usually doesn’t apply. Courts are unlikely to award fees when the plaintiff’s goal is personal gain rather than collective benefit.
What the Court Considers
Courts take a close look at the facts to decide whether the common fund doctrine applies. They want to see that the petitioner’s actions created or preserved a fund that would otherwise have been diminished or lost, and that this benefit was shared by a group—not just the petitioner.
They also examine whether the legal work done was necessary, whether it was done efficiently, and whether the benefit was substantial enough to justify reimbursing the petitioner from the fund. The court must find that awarding fees is consistent with equity and that it does not unfairly shift costs onto the trust or estate when the litigation only served individual interests.
Another important factor is whether the petitioner’s legal team can present detailed, documented time records and expenses to support a motion for fees. Courts will not grant fee awards under the common fund doctrine based on vague or unsupported requests.
Relationship to California Probate Code Fee Statutes
California’s Probate Code contains several statutes that allow courts to award attorney’s fees in trust and estate cases, including Sections 17211 and 15642. These provisions are generally used when a petitioner successfully challenges a trustee’s accounting, when a trustee is removed for misconduct, or when a party acts in bad faith.
The common fund doctrine, by contrast, is not based on statute—it’s based on equity. It can be used even when the Probate Code does not specifically authorize a fee award, so long as the litigation resulted in a benefit for multiple parties and it would be unfair for one person to shoulder the full financial burden.
Sometimes, courts apply both. For example, if a beneficiary successfully removes a trustee who acted in bad faith and who caused losses to the trust, the court may award fees under Probate Code section 17211. But if the removal also prevented future losses and helped all the beneficiaries, the common fund doctrine might provide a second path to reimbursement.
Does It Apply to Contingency Fee Cases?
In some cases, a beneficiary may hire an attorney on contingency to bring a trust or estate case. This means that the beneficiary pays the attorney’s a percentage of the funds recovered through litigation or settlement. If the litigation results in a common benefit to all beneficiaries, the attorney may be able to seek a fee award from the recovered assets, subject to court approval.
However, courts scrutinize contingency-based common fund claims closely. The petitioner and their attorney must prove that the litigation conferred a real benefit to others, not just to their own client. They must also show that the contingency fee agreement was fair and disclosed to the court, and that the amount of the fee is reasonable under the circumstances.
Strategic Considerations for Beneficiaries
If you are considering litigation in a trust or estate matter, and your goal is to protect the estate or trust assets, fix trustee misconduct, or recover wrongfully diverted assets, the common fund doctrine may work in your favor.
This doctrine can be especially helpful in cases where the wrongdoing is widespread, where multiple beneficiaries are harmed, or where the trust’s value has been diminished by mismanagement. If your legal action restores or protects the estate, courts may recognize that your efforts have spared others the burden of bringing their own claims and that fairness requires shared costs.
On the other hand, if your case is mainly about reallocating inheritance shares or invalidating provisions to your client’s benefit alone, the doctrine is unlikely to apply. Courts don’t see it as equitable to make other beneficiaries or the estate pay for litigation that did not help them.
How Trust Law Partners Uses the Doctrine
At Trust Law Partners, we represent beneficiaries in complex, high-value disputes across California. In many of these cases, our clients act not only to protect their inheritance, but to stop misconduct that affects the entire trust or estate.
Our goal is to maximize your recovery and protect your interests, while using every legal strategy available to reduce unnecessary costs. That includes shifting attorney’s fees when the law and the facts support it.
Final Thoughts
The common fund doctrine can be a powerful tool in California trust and estate litigation, but it is only available in limited circumstances. It rewards those who take action to protect an estate, recover assets, or correct wrongdoing, and who do so in a way that benefits more than just themselves.
If you are facing a trust or estate dispute, and you’re unsure how legal fees will be handled—or whether your actions might qualify for reimbursement under this doctrine—it’s critical to speak with experienced litigation counsel. A skilled legal team can help you understand your options, structure your case properly, and pursue every available remedy, including potential recovery of attorney’s fees from the estate itself.
If you have questions or believe that trustee misconduct or estate mismanagement has harmed you or others, contact Trust Law Partners today at 833-982-2079. We offer consultations and, in many cases, work on contingency—so you can pursue justice without paying out of pocket.
