The estate planning trustee is obligated to meet the terms of the trust in the management and dispersal of the assets to the beneficiaries. However, while many trustees are above-board and fulfil their responsibilities to the letter of the law, not all trustees are so honest. So what happens if you catch a trustee stealing or dubiously mismanaging trust assets?
The acts of a trustee are open to examination and scrutiny of the beneficiaries and others involved in the estate. While mistakes can sometimes be made, mismanagement that goes well beyond a simple mistake is referred to as a breach of fiduciary duty, and can be sued for as such.
If you suspect a trustee is in breach of fiduciary duty, typically a beneficiary must file a complaint with the court to begin your case. Of course, a successful case means gathering all the information that you can on the possible breach. This means requesting the accounting from the trust and examining the actions of a trustee. Since it is usually the trustee that will hand over the accounting, stalling tactics or failure to comply is highly suspicious behavior. If you find the assets of a trust and their own finances co-mingled or conflicts of interest within the trust, you have a very strong case. Finally, a forensic accounting expert should be asked to review the accounts to identify any other potential fraud.
When it is time to go to court, the more information you have, the better case you will have. However, courts will also review suspicious activity of the trustee as well. Even if fraud is not proven, it is more than likely that the trustee will be removed anyway. However, this is all a very stressful situation, and you will want a skilled lawyer by your side. If you suspect trust fraud, contact us today.