An effective, decisive and conscientious trustee is needed to oversee the assets within a trust. It is a role with great responsibilities in handing out assets to the trust’s beneficiaries. The trustee must have certain qualities that the grantor or trustor – the person who created the trust – recognizes as crucial and necessary.
However, there have been situations in which the trustee shirks or even abuses his or her responsibilities. As the beneficiary of a trust, you must keep an eye out for signs of this happening. Those assets were set aside by your father and meant for you and your siblings. If the trustee is untruthful, incompetent or even crooked by breaching fiduciary duty, you must act promptly.
Conflict of interest, poor record-keeping
In such situations, you and your siblings must take legal steps to have this person removed as trustee. Otherwise, the assets that your father meant for you and your sibling to share will dwindle.
Here are some of the signs that a trustee is neglecting or abusing his or her duties:
- Failing to distribute or making excessively small distributions to beneficiaries: Why is the trustee withholding distributions? Wrongdoing likely has come into play, and you need to uncover what is happening.
- Lack of proper record-keeping: Thorough records of assets in the trust must be kept as well as the money in it used to make investments. Make regular requests of records. If the trustee declines to produce them, mismanagement of funds is a possibility.
- Evidence of conflict of interest: A self-centered, unscrupulous and greedy trustee will have his or her best interests in mind when managing a trust. Look for evidence that the trustee is making personal investments with the assets. Also, if the trustee suddenly accumulates some luxurious items, signs are that he or she is using the trust’s money to purchase them.
- Combining the trust’s assets with his or her own: Commingling assets is abuse. Assets from the trust must be separate. Such an action is a terrible abuse and breach of fiduciary duty.
Estate planning has no place for trustees who turn out to be selfish and untrustworthy. Maintain a watchful eye over the trustee and make sure your father’s wishes remain in place.