Trusts aren’t just for the mega-wealthy. They can serve you and your family as well, especially if you have hard earned assets that you wish to Protect and Preserve for your loved ones. You want to avoid the expenses and delays of probate court, maybe the tax-man, financial creditors and predators or the $15,000.00 per month Nursing Home? Perhaps you have a child or grand child with special needs? Whatever your Why is…a Trust that is “funded” properly with your assets can save you lots of money and protect your family when the shoe drops…yes …your shoe!
In an ideal world, a trust runs like a well-oiled machine provided the Trustee manager of the Trust carry out their responsibilities and duties properly and act in the best interest of the named trust beneficiaries. In fact, a Trustee has a fiduciary responsibility to act with the highest duty of care and in the best interest of the beneficiaries. If they do not, they can be held personally liable.
That’s the ideal world. Not everybody lives there, unfortunately. Individual trustees can be inexperienced, irresponsible, careless, overworked, overwhelmed, intentionally uncooperative, reckless, or even abusive or dishonest. Beneficiaries can become anxious and suspicious, with or without reason. And grit gets in the gears and family problems arise. .
If you are a beneficiary who’s concerned that the trustee is not living up to his or her duties, we suggest a progressive approach. Start by being nice and assuming the best intentions. Specifically identify what’s troubling you. For example, the trustee failing to communicate with the beneficiaries, or only communicating with chosen beneficiaries and intentionally ignoring others. Try to call or sit down with the trustee to discuss your concerns. Ask questions and the trustee should be patient and address your questions and concerns and be transparent with you. The trustee should also share with each beneficiary a copy of the Trust. Disagreements may turn out to be misunderstandings that can be worked out amicably. However, if the Trustee becomes hostile and refuses to share information or acts suspiciously or deceptively then these are “red-flags” that the trustee may be a rogue trustee and has ulterior motives.
If you don’t have a copy of the trust document, ask for it. Don’t believe what you’re told about what the trust says. You as beneficiary have the right to read the document and to make sure that what you think you’re entitled to is in fact what you are entitled to because that is what the trustmaker intended for and their final wishes need to be honored.
Beneficiaries have the right to know where trust funds have been placed, how much income the funds have earned, and how much the trustee has spent on expenses for legal and accounting fees, reimbursed fees, estate expenses and realtor commissions. If your trustee has not provided you with an accounting, ask politely in writing. Request that the trustee responds within a specified reasonable time. If your request is simple – for example, you’re only asking for a copy of the trust document – that time could be short. If you want an accounting, allow the trustee more time to calculate expenses and reconcile accounts. Your trustee should be cooperative in keeping with their duty of loyalty to you as a beneficiary.
If all goes well, the situation may be resolved at that point.
If not, though, act immediately. Don’t merely hope things will take care of themselves. Your time to go to court is limited and you may be penalized for not acting promptly. Call an experienced trust-and-estate lawyer. General practitioners may be good negotiators, but they are probably unfamiliar with current trust-and-estate law. You need an attorney who has extensive experience with trustees or executors who have mishandled an estate or otherwise breached their duties. And remember – you need your own attorney, not the attorney who drafted the trust. Unless, the attorney is acting as the Trust Protector for the Trust and they can assist you by intervening and directing the trustee to take the correct steps and fulfill their trustee duties.
You and your attorney can then choose the optimal way to reach your goals. Maybe simply a letter from the attorney to the trustee will do the job. If it doesn’t, though, it may be time to go to court. Your attorney will advise you.
But what if you think the trustee is actually stealing? Misappropriating your inheritance? Giving and proposing to give trust funds and assets to non-beneficiaries? Isn’t that a crime? A police matter?
Yes, but. The police won’t pursue a case unless the trustee has actually embezzled or absconded. Otherwise, if your trustee has invested funds recklessly, or lost money, or won’t communicate with you, those are civil disputes that are resolved in probate court, not criminal court. The probate judge can force uncooperative trustees to act, or, if necessary, may remove the trustee altogether if she is unfit or the situation otherwise warrants.
In sum, an individual serving as trustee is responsible to communicate honestly and openly with beneficiaries, to gather and invest property of the estate, and to account for property that passes through. That can be a big job, so allow your trustee some latitude if possible. But life being what it is, drama and chaos can break out, especially if familial relationships aren’t what they could be wished-for. From my experience, we recommend a “Family Care Meeting” with the trustee and beneficiaries only early in the process because that keeps all interested parties in the loop and updated of what is going on and what the next steps are. Transparency and good communication are king for a successful trust administration process.
If you find yourself in that situation, we would be happy to talk with you about how we could help provide support and expertise, to move toward a happier solution.
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