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Mismanaged Trusts: When Is It Time to Litigate?

Category: News

Trusts can be essential tools for making sure that a person’s final wishes are carried through. When used and managed properly, they can help streamline the probate process and provide certainty that the deceased’s loved ones will have the money they need for years to come.

Unfortunately, even the best laid plans can run into unexpected issues. With trusts, one of the most common issues involves mismanagement of trust assets by the trustee. In some cases, mismanagement is the result of an honest mistake that can be easily addressed to avoid future issues. In others, the trust’s beneficiaries can be left with little choice but to proceed with litigation.

Common Forms of Trust Mismanagement

If you are concerned that your loved one’s trust isn’t being managed properly, it is important to take action immediately. If you wait, the mismanagement may continue, and it can become much more difficult to recover any losses. The following are all common forms of trust mismanagement that may require litigation to resolve:

Use of trust assets for the trustee’s personal gain. Trustees have access to valuable property and often significant amounts of cash that they are strictly prohibited from using for their own personal benefit. Unfortunately, for some trustees the temptation is simply too great to overcome.

Failure to provide accurate accounts of trust assets. Trustees are required to maintain complete records and provide beneficiaries with accurate accounts of investment, distributions and other activities involving trust assets. If you cannot get reliable information from a trustee, this may be a warning sign of other forms of impropriety.

Failure to follow the settlor’s instructions for distribution of trust property. The crux of the trustee’s role is to carry out the instructions left behind by the settlor (the person who established the trust). Failure to follow these instructions in any form can be grounds for beneficiaries to file a claim against the trustee.

The trustee acting in the best interests of a single beneficiary to the detriment of others. When a trust has multiple beneficiaries, the trustee cannot play favorites. If a trustee makes decisions that clearly are intended to put the interests of one or a handful of beneficiaries above the rest, the beneficiaries who are harmed may have to sue to preserve the trust’s assets and protect their rights.

Failure to safeguard trust assets. Part of proper trust management involves safeguarding the trust’s assets from theft or depletion. Sharing account information with third parties, making reckless investments and other improper acts can all be grounds for beneficiaries to institute trust litigation.

Bribes and other conflicts of interest. Accepting bribes and engaging in conflict-of-interest transactions are clear forms of trust mismanagement. When a trustee is knowingly causing harm to the beneficiaries’ interests, the beneficiaries may need to act quickly to preserve what is left in the trust.

Are You Concerned About Trust Mismanagement? Contact South West Florida Probate Trial Lawyers Today

The Fort Myers trust litigation lawyers at South West Florida Probate Trial Lawyers are dedicated to helping trust beneficiaries in the Fort Myers area enforce their legal rights. To find out more about how to protect yourself in cases of trust mismanagement, call us at (800) 785-0647 or request a free consultation online today.