When someone passes away, those left behind can experience a range of difficult emotions, from sadness and grief to anger and confusion. Add to this the complexity of administering an estate or trust, and the risk of a dispute can become very real.
In these situations, there can be money, property and a person’s legacy on the line. And if the people in charge of the process are not acting appropriately, beneficiaries may want to consider legal action. This type of decision could become necessary if you believe the trustee is not upholding his or her duties.
Types of trustee misconduct
Trustees are people, and they can make mistakes. However, in some cases, their actions are grounds for contest or removal. Such could be the result if you believe a trustee engaged in the following types of misconduct:
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- Mixing trust funds and property with personal funds and property
- Mismanaging assets
- Treating beneficiaries unfairly
- Failing to communicate appropriately with beneficiaries
- Neglecting legal and financial responsibilities
- Completing transactions that benefit him or her but conflicts with the best interest of a beneficiary
- Withholding property from beneficiaries
- Permitting a co-trustee to engage in breaches of duty
- Failing to follow the instructions in a trust
These actions can lead to legal consequences, including removal as trustee and civil penalties against the trustee.
Improper or unpopular?
Trustees may do things that beneficiaries do not agree with or understand. This does not necessarily make them improper or provide grounds to remove the trustee.
For instance, trustees can collect reasonable fees; they should comply with the terms of a trust; they can delegate specific duties to someone else; they can use trustee powers for personal benefit if authorized to do so by the trust.
These are all actions that beneficiaries may take issue with, but they may not support legal action to remove the trustee.
Minimizing trustee disputes
Serving as a trustee is a considerable responsibility, and not everyone is suited for the role.
As such, if you are creating a trust, be sure to consider carefully who you name as a trustee. If you are the trustee and unsure of your duties, you can consult an attorney to help you navigate the process. If you are a beneficiary worried about the actions of a trustee, you may want to explore the possibility of removing the trustee.