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Spanos Family Trust Dispute: Be Careful Who You Choose As Successor Trustee

Chargers owner Dean Spanos, also the team’s chairman, is being sued by family members who have accused him of inappropriately diverting funds away from the Spanos family trust, of which many family members are beneficiaries.  Dean’s parents, Alex and Faye Spanos, purchased the Chargers in 1984 and subsequently transferred 36% ownership of the team into their trust. 

When the Chargers moved to Los Angeles in 2017, the trust was supposedly set to receive funds from the revenue of the team’s new SoFi Stadium.  However, family members accuse Dean and his brother Michael Spanos of diverting this stadium revenue to themselves by amending the family trust in 2018 when their parents were in “failing health.”

While the family legal battles are ongoing and the allegations against Dean and Michael Spanos are serious, these unfortunate circumstances also raise important issues of trust law and fiduciary responsibilities that everyone who acts as trustee of a trust should be aware of.

Trustees owe certain responsibilities to the beneficiaries of a trust, known as fiduciary duties.  Among the many fiduciary duties owed by a trustee, arguably one of the most important is the duty of impartiality when dealing with a trust’s multiple beneficiaries.  Remaining impartial means treating all beneficiaries evenhandedly, particularly when making distributions in accordance with the terms of the trust, making investments and managing trust property.  

If Dean and Michael Spanos are trustees of the family trust, they owe all beneficiaries of the trust a duty to deal impartially and not benefit themselves more than the other beneficiaries.  The court will need to determine whether any fiduciary duties were breached.  If the court determines that one or more fiduciary duties were violated in some way, the trustee(s) could face hefty penalties and be forced to pay monetary damages to the trust.  The Spanos brothers may have been operating from a business perspective, making these decisions in their capacities as chairman and vice chairman.  But regardless of their business roles within the team’s ownership structure, fiduciary duties must still be upheld when dealing with property a trust may have an interest in.

Understanding the responsibilities of a trustee is important when deciding who will serve in that role under your own trust.  As this case shows, even a trustee you feel is the right choice may run into problems with other beneficiaries down the line, often after you have passed away.  A trustee can and should consult with an attorney for advice on properly fulfilling their duties, but it is imperative that your choice of trustee be at a minimum someone trustworthy.

Once they step into the role, trustees are tasked with the regular reporting and accounting of trust business and property, as well as providing this information to beneficiaries.  These responsibilities can seem daunting to an unprepared or uninformed trustee, but having the right professional advisors to guide them can set them on the right course.  Ultimately, transparency and open communication between trustees and beneficiaries are some of the easiest ways to help limit surprises and conflicts like this in the future.

Who you choose as your successor trustees is an important decision that should be made only after giving due consideration to all the available options. 

About Daniel Weiner

Daniel Weiner is a US and UK licensed attorney, based in San Diego, who provides trust administration and estate planning services to families and individuals across California. Dan guides his clients through the often confusing maze of financial and legal decisions to create plans that ensure the well-being of their families and the accomplishment of cherished family goals.


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