Estate Planning Lawyer
The main responsibility of a trustee is to have authority over the management of the assets in a trust. Because the trustee has so much power over the grantor’s trust, there are quite a few legal obligations and duties the trustee must follow. The law places a fiduciary duty on the tree, which means that the trustee is responsible for putting the trust’s beneficiaries’ interests into account first when they make any decisions regarding how the trust with be managed. If you are the beneficiary of a trust and are concerned the trustee is mismanaging the trust, you should contact a trust litigation attorney. Legal professionals will work with you to determine if you have a valid case.
What is Mismanagement of a Trust?
A trustee is required to keep a record of any actions taken on behalf of the trust. A trustee is not allowed to commit fraud, hide assets, negligently manage the assets of the trust, or inhibit any distributions to beneficiaries. Obviously, a trustee is not required to predict the market or any future financial performance of the assets. There are some leeways given to the trustee to make judgement calls that they believe are in the best interest of the trust. However, a fiduciary duty is a very high standard and if the trustee does not act as a fiduciary, there can be severe legal consequences.
Fiduciary duty essentially requires the trustee to manage the trust with competence, integrity, and honesty. A lawsuit normally takes place when a beneficiary believes the trustee has been mismanaging the trust and not making regular distributions of the assets. In many cases, there is no intentional deceit occurring; if someone is named as a trustee who does not have experience paying creditors, distributing assets into many accounts, and taxes, it can be very easy to become overwhelmed. Even if there are only good intentions by the trustee, they must still be responsible to handle the duties assigned to them by the trust. If they are not able to complete the tasks, they can be removed as trustee. Trustees are also able to be removed if there is a conflict of interest or if they illegally divert or dispose of assets in the trust intentionally.
How Do You Know Mismanagement is Taking Place?
It can sometimes be tough to determine if a trustee is not following their responsibilities. For instance, a trustee could want to delay some legal actions to recover a higher fee according to the terms of a trust. However, a beneficiary should receive a full accounting of everything the trustee is doing and if a trustee is hiding their actions, it is a good sign that something is not right. Vague answers to simple questions, wrong accounting, and delays are all signs that the trust could be mismanaged.
Schedule a Consultation
If you are concerned a trust is being mismanaged, speak with an experienced trust litigation lawyer Cherry Hill, NJ relies on today. They can speak with you about your circumstances and the goals if you are able to bring a claim.
Thank you to our friends and contributors at Klenk Law for their knowledge about estate planning and trust mismanagement.