What Can a Beneficiary Do if a Trust Has Been Mismanaged?

Author: MatadorAdmin Posted on: . Filed in: Uncategorized.

Estate Planning Lawyer

Many people create revocable trusts in order to keep assets from going through probate and avoid some estate taxes. Theoretically, this process is pretty straightforward: a grantor creates a trust and transfers their property into it and then selects a trust company, bank, or an individual to be their trustee. There can be problems, however, if the person the grantor selected to be trustee mismanages the trust and causes beneficiaries to lose the money they were going to receive. If mismanagement does occur, the beneficiaries are able to take legal action to obtain damages from the trust. An experienced trust litigation attorney can help you fight for compensation due to someone mishandling your loved one’s trust. Losing a loved one is painful enough, so let our team help you obtain what they would’ve wanted you to have.

When Could a Trust Be Mismanaged

It often seems like an obvious decision to select a family member as a trustee. The grantor knows this person very well and could also have them as a beneficiary, which would be a good reason for the trustee to ensure they are managing the trust well. Unfortunately, this is not always the case. There have been some circumstances where the trustee may unknowingly or knowingly mismanage the trust, which could leave to harming the beneficiaries as a result.

In order to take legal action to prove the beneficiary was mishandling the trust, the beneficiary must be able to prove they were acting in one of the following ways:

  • Because of a conflict of interest, the trustee used funds from the trust to support someone other than who is listed as a beneficiary
  • The trustee used the money from the trust for personal gain without telling any of the beneficiaries about the profit
  • The trustee made decisions based on bribery, rather than what would be best for the beneficiaries
  • The trustee favored one of the beneficiaries in a way that was not in the best interest of most of the beneficiaries
  • The trustee did not take proper safeguarding actions to protect the trust

How Do You Prove a Trust Was Mismanaged?

While a beneficiary may believe that the trustee has mismanaged the trust, they will need to be able to prove this to the courts in order to receive any damages. In some states, a trustee has discretionary power when deciding how to manage the trust, so the beneficiary will need to prove that the trustee was not acting in good faith. Any of the situations listed above would show trust mismanagement, so it is important that the beneficiaries have solid evidence of this taking place. The trustee is required by law to keep a record of all transactions within the trust, so in a lot of situations it should not be hard to find evidence that proves the trust was mishandled.

Schedule a Consultation

If you are unsure if the trustee has acted irresponsibly, it is recommended that you speak with an estate planning lawyer Fairfield County, CT trusts. While a trustee does have some freedoms when it comes to making decisions about trust assets, they cannot act in a way that is not in the best interest of the beneficiaries. You should take legal action against them instead of sitting back and let them lose your inheritance.



Thank you to our friends and contributors at Sweeney Legal for their insight into estate planning and beneficiaries.