Signs Your Trustee Has Breached Fiduciary Duties
Trustees are invested with considerable power when administering a trust. As a beneficiary, you might have concerns about how the trustee is handling trust assets, including whether the trustee is taking unfair advantage of you.
At Millhorn Law, our trust administration attorneys in The Villages understand the law of fiduciary duties quite well. We can advise beneficiaries about their rights and can also represent them in court. Please contact us today to learn more.
The Trustee is Not Following the Trust Instrument
This is a huge red flag, and you should certainly seek an attorney’s input if you notice the trustee is not following the document. For example, the trust might limit what kinds of investments the trustee can make. It also probably lays out when the trustee should make a distribution to the beneficiaries.
Unfortunately, many beneficiaries have no idea when the trustee deviates from the trust requirements because they have no copy of the trust instrument. You should certainly request a copy if you are a beneficiary and read it.
The Trustee Does Not Make an Accounting to You
Florida law imposes a duty on trustees to account to inform beneficiaries about the administration. Upon reasonable request, a trustee should make an accounting which discloses all cash and asset transactions. A trustee may also need to make an annual accounting. These rules are found at Fla. Stat. §§ 736.0813 and 736.08135.
These rules make sense. They allow beneficiaries to observe whether the trustee is following his or her duties. If you make a request for an accounting but never hear back, then the trustee could be hiding something.
The Trustee Favors Another Beneficiary
Trustees have a duty to be impartial. Of course, the trust itself does not have to treat all beneficiaries equally, so the fact that you are being treated unequally is not, by itself, proof of impropriety.
However, read the trust. It might require equal distributions to all beneficiaries. If another one receives more than you do, you should investigate further with the help of a trust administration attorney.
The Trust is Bankrupt
This is another red flag. Trustees must administer the trust prudently. In other words, they must use the care that a normally prudent person would, given the terms of the trust. If the trust suddenly goes bankrupt due to poor investments, then the trustee has probably breached their duties.
Again, we need to know what is in the trust document. It might require high-risk investment, though that is rare. Nevertheless, when a trust loses a substantial amount of value suddenly, further investigation is warranted.
The Trustee Buys Trust Assets
A trustee must be loyal, and no trustee should engage in self-dealing. This can occur when the trustee in his individual capacity buys trust assets or someone close to the trustee does. The risk is that the assets are not sold for fair value.
The same risk exists when the trustee sells personal assets to the trust. The risk here is that the trust is overpaying what is fair to the benefit of the trustee.
Look through the accounting provided to you and see what assets are bought or sold. An attorney can review whether fair value was paid.
We Have Deep Experience in Trust Administration
Ethical lapses happen quite frequently when it comes to trusts. To learn whether you are being taken advantage of, contact Millhorn Elder Law Planning Group today by calling 800-743-9732.