Once you assume the role of trustee, you have a lot of obligations to fulfill. You must adhere to the rules set in the trust documents, as well as all relevant state laws. You will also need to manage estate assets and handle claims or requests from the beneficiaries.
Frequently, trust administration is straightforward, but sometimes, legal issues and challenges may arise. Trustees may sometimes take litigation brought by beneficiaries in an attempt to remove them from their roles.
What are some of the most common reasons that people challenge a trustee or their actions?
1. Failure to properly act
Sometimes, what a trustee doesn’t do is the biggest concern. When they haven’t taken the necessary steps that would protect the resources in the trust or they have failed to respond to requests from beneficiaries, the circumstances may justify litigation. If a trustee cannot fulfill their obligations, they may need to step down and let someone else handle those responsibilities.
2. A breach of fiduciary duty
Typically, the trustee should remain neutral in their management of trust resources and distribution of the same. If a trustee makes decisions that do not benefit the trust or its beneficiaries and instead lead to personal gain for them as an individual, that decision to put their own needs first might result in their removal from their position for a violation of their fiduciary duty.
3. Failure to follow trust instructions
There are some trustees who allow their personal feelings, such as a bad relationship with one of the beneficiaries, to influence how they fulfill their role.
If the trustee refuses to distribute assets from the trust to a beneficiary not because they are non-compliant with the terms included in the document but instead because of their personal feelings, that could lead to the removal of the trustee from the estate. So would a failure to communicate with beneficiaries.
Any time a trustee does not act in the best interests of the trust or fails to fulfill their obligations facing trust litigation. The best way to protect your position as a trustee is to thoroughly educate yourself about your responsibilities under the law and based on the specific trust documents. Careful trust administration and professional support can reduce the likelihood of a trustee removal lawsuit or of the other party succeeding if you already face litigation.