Trustees have been given an important responsibility to administer an estate. But not all trustees live up to what is expected of them. If you are having problems with a trustee and considering legal options against them but the trustee is discouraging you from taking action by denying you information, and telling you that he or she has a defense under the terms of the trust, there are some things you should know.
Here are some of the most common misconceptions about the protection a trustee can enjoy under the terms of the trust:
Myth: The trust does not require an accounting
Irrespective of the terms of the trust, in most cases, a court may order the trustee to provide an accounting, and may order the disclosure of supporting documentation for the financial transactions included in the accounting.
Myth: Only current beneficiaries are entitled to the information
In most cases, remainder beneficiaries have an interest in the trust, and as such, can request information just like current beneficiaries.
Myth: The trust document releases the trustee from any liability
While the trust, depending on its terms, may protect the trustee from liability if he or she was negligent, the trust document cannot release the trustee from gross negligence or willful misconduct. In order for an act or omission to rise to the level of gross negligence, the trustee must consciously disregard his duty of care. Judges, of course, may differ as to whether certain conduct constituted negligence or gross-negligence. As such, presenting your evidence in the light most favorable to your argument is critical.
Myth: The trust gives full discretion to the trustee to determine distributions
Many trusts provide that the trustee has discretion to determine how much money should be distributed to the beneficiaries’ health, well-being and maintenance. This discretion, however, does not protect the trustee when he or she fails to exercise the duty of impartiality (to treat beneficiaries equally) and the duty to communicate.
Myth: Trustee’s attorney fees will be taken from the trust
Oftentimes, trustees try to encourage beneficiaries from seeking a legal remedy by stating that their attorney’s fees will be paid out from the trust, while the beneficiaries’ attorney fees will not. If the court, however, finds misconduct on the trustee’s part, the court may deny the trustee his attorney’s fees. Additionally, if the court finds that the beneficiary benefited the entire trust by bringing an action, the court may order that the beneficiary’s attorney’s fees be paid from the trust.
The best way to protect yourself from an untrustworthy trustee is to understand the protections a trust provides. Don’t be misled. Give us a call if you need a hand, we can advocate for you and protect you from a trustee who is not carrying out his or her responsibilities.