A trust is a great mechanism for handling estate business and it can be beneficial to anyone with any number of assets, concerns, or circumstances. For example:
- You want to keep your affairs private and stay out of probate court;
- Maybe you have stepchildren;
- You may wish to leave money to your favorite charities;
- You own a small business and you’re concerned about liability;
- Perhaps you have a child with special needs;
- You have an elderly parent who might need government benefits
And the list goes on. There are lots of situations where a trust is just the right legal tool to help.
In an ideal world, a trust runs like a well-oiled machine. The creator of the trust is even-handed and fair in where he wants his money to go. 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, provides beneficiaries with regular accountings of how those investments are doing, and pays beneficiaries earned interest right on time. When the trust has served its purpose, the trustee efficiently pays out assets and winds up the estate.
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. And grit gets in the gears.
If you are a beneficiary who’s concerned that a trustee is not living up to his or her 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 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.
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 and 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.
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. You have a limited time by which to make objections or seek court involvement, and you may be penalized for not acting promptly. Call an experienced trust-and-estate lawyer to assist you. This attorney cannot be the one who drafted the trust, and should be someone who has extensive experience working advising trustees and beneficiaries alike.
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? Isn’t that a crime? A police matter?
Yes, but…. The police won’t pursue a case unless the trustee has actually embezzled or run off with the money. 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.
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. Please contact us or schedule a meeting to discuss your situation. We are here to help.
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Kevin Snyder is a husband, father, and an Orange County estate planning attorney and elder law attorney at Snyder Law, PC in Irvine, California. He's all about family and passionate about estate planning, elder law, and veterans. He founded Snyder Law to help people be prepared and have the peace of mind they are protecting their families and aging parents for when life happens.