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How can a trustee defend against claims of misconduct?

On Behalf of | Aug 31, 2023 | Trustee Removal/Defense

A trustee plays a very important role in the administration of a trust. Their responsibilities usually include properly managing trust resources, which could include taking physical care of assets or making determinations about financial investments. They owe a fiduciary duty to the beneficiaries of the trust to act in their best interests, which usually means attempting to maximize the value of the assets that make up an estate.

Additionally, the trustee will need to distribute resources as appropriate given the instructions left behind by the testator. Ideally, the trustee will serve as a key form of support for those vulnerable and in need of financial help or receiving property from a loved one. Yet, sometimes those who benefit from a trustee’s hard work may try to remove them from their position by initiating probate litigation. How can a trustee defend against allegations of misconduct or incompetence?

Maintain thorough records

The best defense against allegations of misconduct as a trustee will involve maintaining thorough records of the choices made relating to the trust even before such claims arise. From records affirming how someone researched investments and what professionals guided their decisions to invoices and receipts detailing the use of trust assets, the thorough records maintained by a trustee are often the most important evidence for protecting them against claims of misconduct or incompetence.

Learn necessary skills and family details

Sometimes things go wrong during trust administration. A trustee doesn’t always know what a beneficiary intends to do with certain assets, nor can they predict what will happen with investments.  A trustee who has either learned about specific investments or sought professional help can likely establish they have fulfilled their duty, as can someone who learns about family challenges and seeks to uphold the trust instructions to the best of their ability.

Although beneficiaries may want to trustee to be a scapegoat, it is not always their fault that the value of the trust diminishes or someone misuses resources. A trustee who can establish that they have invested time and effort into managing the trust can often counter claims that they did not do their due diligence.

Trustees often struggle to manage complex trusts and with defending themselves against challenges in probate court without professional support. Trust assets can typically help cover the representation of the trustee during a dispute. As a result, seeking legal guidance (at no personal cost) can be of the utmost importance for those seeking to defend the actions they have already taken and to better ensure their retention of their role as trustees.