Trustees have an enormous responsibility when administering an estate or trust. They must follow state laws as well as the decedent’s wishes when carrying out their duties. Since beneficiaries rely on the trustee’s judgment for their livelihoods, beneficiaries can file a lawsuit to hold the trustee or executor personally accountable for losses when mismanagement occurs.
Warning Signs of Financial Mismanagement of a Trust or Estate
Trusts can be subject to various forms of misappropriations, ranging from misuse of funds to outright embezzlement or stealing from an estate. However, it is not enough to show that the trust suffered losses in order to remove the trustee. Beneficiaries will be expected to prove that the trustee has somehow failed in his or her fiduciary duty.
Some of the most common trustee actions that lead to estate litigation include:
- Lack of documentation. Trustees are required to file a number of documents to provide transparency, including yearly tax returns for a trust and an annual accounting report.
- Changing the terms or conditions of the trust or will. A trustee should be held to the original conditions of a will, and make no attempt to changing the terms for the transfer of trusteeship, distribution of assets, or other requirements without good reason.
- Unexplained financial losses. Trustees may claim that trust losses were due to natural fluctuations in the market, when in fact the loss occurred due to poor investment strategies or outside payments.
- Conflicts of interest. Trustees have a fiduciary responsibility to beneficiaries and should avoid any conflicts of interest, dual agency, or use of trust funds for personal gain.
- Closed communication. Disputes often occur when trustees are unwilling to answer questions about the conditions of the trust or explain investments using trust funds to beneficiaries.
How We Can Help
If you suspect that an executor or trustee is guilty of mismanagement, our estate litigation attorneys can initiate and represent you in an accounting proceeding to determine whether your assets have been properly managed. These proceedings typically require many years of detailed financial records as well as an in-depth understanding of trust and estate administration. Contact our law firm today to tell us more about your dispute in your initial consultation.