A trustee is legally required to administer a trust solely in the interests of the beneficiaries.
So, what can you do as the beneficiary if you feel the trustee has breached his or her fiduciary duty? As a Crossville estate planning attorney, I would like to share some remedies to consider when you find yourself dealing with an untrustworthy trustee.
Demand Transparency from the Trustee
As a beneficiary, you have a right to demand a copy of the trust accounting. Such transparency can help you determine whether the assets in the trust are being managed properly. If the trustee hesitates to provide such accounting or simply refuses, you may petition the probate court in order to compel the trustee to produce such information.
You may also consult with an attorney to help determine if the trustee is conforming to the terms of the trust faithfully, especially in instances when trust income is allocated unequally among the beneficiaries. However, this does not necessarily mean that the trustee is committing a breach of fiduciary duty because it's possible that the trust allows the trustee to make these distributions at his or her sole discretion.
Verify if You Have the Authority to Remove the Trustee
One question you may want to ask your attorney is under what circumstances the beneficiaries can work to remove a trustee if it becomes clear that he or she is no longer acting in good faith. Some trusts are created with the express provision that beneficiaries have the right to remove a trustee and appoint another individual, or a professional trust company, to fill the role should a breach of fiduciary duty occur.
You may also file a petition with the probate court for removal of a trustee if the trust does not give you, the beneficiary, the authority to remove a trustee despite the trustee's wrongdoing or neglect of duty. The court may call for a hearing and presentation of evidence to thoroughly examine the actions of the trustee. Afterward, the court could decide whether to remove the trustee or not.
Check if You Have a Trust Protector
You may also check the trust agreement to see if you are provided with a trust protector. A trust protector will serve as the one who prohibits the abuse of discretionary powers of the trustee. The trust protector can step in to veto certain inappropriate or poor decisions made by the trustee.
Seek Legal Assistance
It is considered an illegal act when a trustee fails to adhere to his or her fiduciary obligations. You can hold this untrustworthy trustee legally liable for his or her failure to act in good faith. You may also consider pursuing legal action in circumstances where extreme wrongdoing has been discovered.
It's important to work with an experienced Crossville estate planning attorney when determining what legal actions are appropriate under your circumstances. If you need guidance in this area, we invite you to contact our Crossville law firm at 931-250-8585 to schedule an appointment.