Posted by: Jason T. Johns
Trusts aren’t just for the mega-wealthy. Do you want to keep your affairs private and stay out of probate court? Do you have stepchildren? Do you want to leave money to your favorite charities? Or do you own a small business and you’re concerned about liability? Perhaps you have a child with special needs. Or maybe you have an elderly parent who might need government benefits. These are just some of situations where a trust is an effective tool to carry out your wishes.
In an ideal world, a trust runs like a well-oiled machine: The creator of the trust is even-handed and fair in directing where the money is to be distributed. The recipients of trust funds – the beneficiaries – want the best for all, including themselves. The trustee – the person entrusted with managing the money in the trust – is conscientious and responsible. The trustee invests wisely. The trustee provides beneficiaries with regular accountings of how those investments are doing. And the trustee makes distributions to the beneficiaries on time and in satisfaction of the trust’s terms.
That’s the ideal world. Not everybody lives there, unfortunately. Individual trustees can be inexperienced, overworked, overwhelmed, intentionally uncooperative, or even abusive or dishonest. Beneficiaries can become anxious and suspicious, with or without reason.
If you are a beneficiary who’s concerned that the trustee is not living up to the duties, we suggest a stepped approach. Start by being nice and assuming the best intentions. Specifically identify what’s troubling you. Try to sit down with the trustee to discuss your concerns. Disagreements may turn out to be misunderstandings that can be worked out amicably.
If you don’t have a copy of the trust document, ask for it. Don’t just believe what you’re told about what the trust says. You, as a beneficiary, have the right to read the document (at least the portion that affects you) and to confirm you are receiving the assets to which you are entitled.
Beneficiaries have the right to know where trust funds have been invested, how much income the funds have earned, and how much the trustee has spent on expenses and commissions. If the 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.
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. Contact our office to discuss the situation and review your options. Our attorneys have extensive experience with trustees or executors who have mishandled an estate or trust, or otherwise breached their duties. And remember – you need your own attorney; the attorney representing the trustee does not represent you.
Our attorneys can guide you to the optimal way to reach your goals. Maybe a letter to the trustee will do the job. If it doesn’t, though, it may be time to go to court. We will advise you as to all of your available options.
But what if you think the trustee is actually stealing? Misappropriating your inheritance? 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 the trustee has invested funds recklessly, or lost money, or won’t communicate with you, those are civil disputes that are resolved in court, not criminal court. The judge can force uncooperative trustees to act, or, if necessary, may remove the trustee altogether if the trustee is unfit or the situation otherwise warrants.
Overall, any individual serving as trustee is responsible to communicate honestly and openly with the beneficiaries, to gather and invest property of the trust, and to account for property that passes through the trust. That can be a big job, so allow the 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.
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.
Our firm is dedicated to helping our clients and their loved ones work through issues and implement sound legal planning to address them. If we can help in any way, please don’t hesitate to contact our office at (630) 221-1755.