The November 22-23 weekend investor section of The Wall Street Journal includes an article entitled “The Trouble with Trustees,” which is a lengthy article discussing how both trustees and beneficiaries of a trust can manage the delicate relationship that can be strained when they clash over how to invest and/or spend the trust’s money.
A Trust is established by one person for the benefit of another person(s), but rather than giving the money outright to the beneficiary, the person creating the trust asks a third party (the trustee) to hold the money or property for the benefit of the beneficiary(ies). The trust’s creator has considerable flexibility in controlling the terms of the trust and how the trustee should manage, invest, and/or distribute the Trust’s assets and income.
Not surprisingly, the Trust’s beneficiaries can often disagree with the trustee’s decisions. For instance, when the beneficiary asks the trustee for a new Porsche but the trustee decides that a more economical Honda should suffice, a clash may occur between the beneficiary and the trustee over which car should be purchased.
Ford + Bergner has represented countless clients in disputes over trusts. Below is a sample of the types of disagreements that arise between trustees and beneficiaries:
1. Disagreement over the trustee’s accounting for the assets and income.
2. Disagreement over the way that the trustee has invested the trust’s assets.
3. Disagreement over how the income is divided between the multiple beneficiaries of the Trust.
4. Disagreement over how much of the income/assets should be distributed in a particular year.
The Wall Street Journal article encourages trust beneficiaries to regularly review the accounting provided by the trustees. It also suggests that the beneficiaries should regularly stay in contact with the trustee and keep notes from those conversations. For trustees, maintaining accurate and complete financial records is important, and the prudent trustee should always treat the trust beneficiaries with respect, regardless of the request.
If you are either the trustee or the beneficiary of a trust and find that you are in a dispute over the Trust, the attorneys at Ford + Bergner will be happy to assist you.