If you are the beneficiary of a trust, you may be able to challenge the Trustee’s accounting. It can be a messy, expensive and time-consuming process. Taking advantage of an attorney’s expertise can help you to navigate these tricky waters.
In the course of administering a trust, fiduciaries are held to the highest accountability standards. They are required to make decisions in the best interests of the beneficiaries. However, fiduciaries are also liable for a variety of liabilities. For example, if a trustee mishandles money, the beneficiaries can file a lawsuit against the trustee.
Fiduciaries must make sure to take proper care of the assets in a trust. Mishandling of assets can indicate fraud, mismanagement, or theft. Also, if a trustee is uncooperative, the beneficiaries can file a lawsuit against him/her.
The court can also force a trustee to provide an accounting. This procedure can be initiated by the beneficiary, a creditor, a co-trustee, or the public administrator.
Steps You Can Take
Here are several steps you can take to keep a potential trust dispute litigation at bay.
- Discuss Your Plans to Avoid Trust Disputes: Communication is key when setting up a trust. Let your beneficiaries, trustees, and other family members know of your trust plans well in advance.
- Leverage a Signed Explanatory Letter: By providing some insight into your conditions, you may be able to prevent future trust disputes. For legal purposes, try to hand-write it, this is one of the few times where you should. Also, don’t forget to sign the letter, so there are no questions about its origin.
- Select a Fiduciary: Trust disputes can arise when a family member is appointed as your fiduciary, causing the others to feel neglected. To prevent this, you can consider hiring an independent fiduciary.
- Update Your Trust as Necessary: Many trust dispute lawyers recommend that you review your trust every three to five years, when
- you make a significant amount of money
- run into financial trouble
- family dynamics change
- you become a parent or grandparent
- you lost a spouse or loved one
- you need long-term care or medical attention
When do disputes need to be filed?
Before bringing legal action against a trustee, it is important to make sure that the allegations made against the trust are true. It is also important to note that the trustee has to give a response to the claim within 60 days.
A lawyer’s expert knowledge can help a trustee prepare an accurate account. The attorney can also represent the trustee in court.
Besides filing an accounting case, a beneficiary can also sue the trustee if he or she has acted in bad faith. He or she can also request the court to modify the trustee’s authority or cancel it.
If you have questions about trust accounting disputes, give us a call.
Additional Resources