If you or someone you care about has a trust, and you believe the trustee may be using it inappropriately or even stealing, there are three important things to do.
- Gather all of the documentation you have concerning the trust. This should include:
- The initial trust formation document
- Background on the trustee
- Reports from the trustee
Reports are normally provided monthly and should include a balance sheet as well as a distribution document. A trustee is required to provide all of this information. Failing to provide it can be grounds for dismissal as a trustee in some states.
- Think about what they are doing that you believe is theft or fraud. Make a list and put together any documentation including emails, notes, texts, etc. that support your position. You’ll want the following in your file:
- Notes from personal discussion
- Copies of any related documents or anything that shows her intent, fidelity, attention to detail, availability, etc.
If there are on-going discussions with the trustee, record them if you are in a one-party state. Alternatively, make notes, date them and time stamp them by emailing to your PI, attorney, or a friend. If the trustee asks for something in return for approving an expenditure, that could be very problematic for them.
In one case, we had a trustee who asked the beneficiary for sex. She declined and pretty soon the monthly distribution went from $20,000 to $5,000. Of course, he claimed other reasons but since the trust had more than $5M, it wasn’t a reasonable reduction.
- Read the trust laws in your state so you understand how it is supposed to work. Read the trust documents thoroughly. Essentially you are arming yourself with information. You’ll want to rely on the experts to interpret these laws, but the more you know the more you can advocate for yourself.
Some questions to ask yourself when reviewing the law:
- What are the reporting requirements of a trustee? (this is often the easiest way to show the judge that they are not doing the job)
- Under what circumstances can a trustee be removed?
- How does your trustee’s actions stand up to what the law says?
The short answer to all of this is to do your homework so you are informed, but then let your PI and attorney take it from there.
Be vigilant with regards to any trustee!
A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
A trustee is an individual person or member of a board given control or powers of administration of property in trust with a legal obligation to administer it solely for the purposes specified.