3 reasons beneficiaries may take legal action against a trustee

On Behalf of | Jun 14, 2022 | Uncategorized

The role of a trustee is complex. They often need to manage property that people they personally know wants to access. They may spend years overseeing the investment and administration of trust assets, all for a relatively small amount of compensation set aside by the trust’s creator. They have a fiduciary duty to put the best interests of the trusts’ beneficiaries above their own wishes. 

Most trustees will do their best to fulfill their responsibilities and uphold the intention of the person who created the trust, but some people will fail in their duties. Beneficiaries may need to take action against trustees in situations like the three below. 

1. They breached their fiduciary duty

Sometimes, trustees will try to use trust resources for their own benefit instead of for the good of the trust and its beneficiaries. They could take money from the trust or use their position to enrich themselves or others. Whether they embezzle from the trust or hire incompetent family members to manage the trust’s property, they could abuse their position and reduce what the beneficiaries receive as a result. 

2. They mismanaged assets

Whether the trustee sold stocks at a time when the market was down without a pressing need to do so or left real property vacant so that it got damaged by vandals, the trustee’s management of estate assets can leave much to be desired and could open them up to claims from beneficiaries in some circumstances. 

3. They will not distribute funds as they should

Sometimes, possibly due to personal sentiment, a trustee will not follow through with the instructions about distributions. If they have refused to distribute assets to the beneficiaries who meet the requirements, then they may face challenges in court. 

Knowing when to initiate trust litigation can help the beneficiaries protect the assets they depend on for security.

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rated by super lawyers kimberly D. Neilson Selected in 2015 thomson reuters