Executor and Trustee Counseling

Violations of fiduciary duties by an executor or trustee can be serious, with consequences ranging from suspension and removal to a potential surcharge for the damage caused. What’s more, if misconduct is successfully proven, the executor or trustee could be ordered to pay the surcharge out of their own pockets. The best way to avoid such situations and not inadvertently commit any misdeeds is to work with a lawyer from day one.

If you have questions about your duties or require guidance when making estate- or trust-related decisions, our trustee and executor misconduct attorneys are here to provide you with expert legal advice.

Estate and Trust Accounting Disputes

One of an executor and trustee’s primary duties is to provide beneficiaries with sufficient information to enforce their rights, which include, among other things, being provided with periodic accountings that track every asset that entered and left the estate or trust. Should beneficiaries request other relevant financial information during the administration process, the executor or trustee should make it readily available to them. If an executor or trustee fails to meet this obligation, beneficiaries have the option to file a petition to compel them to account.

On the other hand, if beneficiaries receive an accounting from the executor or trustee that contains red flags, they may wish to have a lawyer inspect it and file a claim to challenge the accounting and hold the executor or trustee responsible for any damage they caused.

If you are an executor or trustee who requires help with your accounting obligations, a lawyer can assist with preparing accountings. Conversely, if beneficiaries are challenging your accountings, a lawyer can help you defend them in court. Contact an experienced Keystone trustee and executor misconduct lawyer today.

Executor and Trustee Suspension, Removal and Surcharge

If an executor or trustee’s offenses are severe, it may be necessary to file a petition for suspension or removal with help from an experienced attorney. If they stole or harmed the assets of the estate or trust, then you could also hold them personally responsible for returning any misappropriated assets and paying damages, otherwise known as surcharges. We go over the types of fiduciary misconduct claims that commonly arise in probate in the subsections below.

Failure to Provide a Copies of Estate Planning Documents

It is part of an executor’s and trustee’s fiduciary duties to provide anyone who stands to inherit from a decedent’s estate or trust with copies of their estate planning documents. A failure to do so can be regarded as a breach of duty and give rise to fiduciary misconduct claims,

Beneficiaries who have not received a copy of a will generally do not need to bring a fiduciary misconduct claim in order to obtain one. If the will has been lodged with the probate court, you can visit the office of the Court to get copies. Securing a copy of a trust, on the other hand, is more difficult, since trusts don’t generally pass through probate or get filed with the County Recorder. While a bit of pressure from a probate attorney can work wonders in making a trustee cooperate with your request for a copy of the trust, it may be necessary to file a fiduciary misconduct claim if they continue to deny you a copy, as beneficiaries can’t enforce their rights without one. For example, without having a copy of the trust, beneficiaries will not know whether it is necessary to bring a trust contest.

Failure to Follow Will or Trust Language

Executors and trustees are bound to the language of the will or trust, respectively. This means that they cannot stray even a little from what is stated in the provisions of the document, as any divergence could be regarded as a breach of their fiduciary duty and give rise to misconduct claims.

While executors and trustees do have a great deal of power when it comes to administering the estate or trust they preside over, the assets held by the estate or trust belonged to the creator of the document, which is why they should have the ultimate say in how and to whom they’re distributed.

If an executor or trustee’s actions are in conflict with the terms of the estate planning document,  a fiduciary misconduct claim should be brought against them immediately.

Failure to Act Impartially

Executors and trustees, even if they stand to inherit from the estate or trust they preside over, are not permitted to let their conflicts of interest get in the way of their administering the estate or trust fairly. Likewise, they cannot allow their personal relationships with beneficiaries and heirs to result in any favoritism. If an executor or trustee violates this duty of impartiality, it is considered fiduciary misconduct and warrants a claim being brought against them.

Take, for example, an executor or trustee who provides a preliminary distribution to a beneficiary. If a similarly situated beneficiary also requests a preliminary distribution from the trust, it would be considered unethical for them to deny them. If an executor or trustee has any doubts about their ability to remain impartial, they have the option to refuse their appointment or resign from their role.

Failure to Provide Accurate Accountings

One of the main ways beneficiaries and heirs can enforce their rights is to inspect the accountings provided to them by the executor or trustee. Upon inspection, if red flags are found, there is a strong possibility that the executor or trustee could have mismanaged, misappropriated or acted negligently with estate or trust assets, respectively.

While executors and trustees have a responsibility to formally account once a year, they can be asked for informal accountings at any time over the course of administration. If they fail to account or provide beneficiaries with faulty or incomplete accountings, it is a violation of their fiduciary duties and beneficiaries should consider bringing a misconduct claim against them.

Unapproved Sales of Estate or Trust Property

If an executor or trustee sells property for below fair market value or sells property to themselves without first obtaining the consent of beneficiaries and heirs or court approval to take such an action, it is may be considered a breach of their fiduciary duties.

If an executor or trustee has breached their duties by making an unapproved sale of property, then it is crucial that a fiduciary misconduct claim be filed right away to prevent the executor or trustee from engaging in further misconduct.

Failure to Communicate and Keep Beneficiaries Reasonably Informed

While an executor or trustee may take their duty to communicate and keep beneficiaries reasonably informed lightly, it is no small deal. If beneficiaries aren’t kept updated about progress during administration, important decisions being made on behalf of the estate or trust, and anything else that could affect their inheritances, they will be poorly equipped to enforce their inheritance rights should they need to in the future.

It is crucial you take action right away if you are dealing with an executor or trustee who is refusing to communicate because their misconduct could ultimately lead to your rights being violated.

Failure to Keep Estate and Trust Assets Separate

Executors and trustees have a fiduciary responsibility to avoid commingling their personal assets with those of the estate or trust, respectively. This is to prevent the possibility of the executor or trustee using estate or trust assets for their own purposes, or causing financial harm to the estate or trust, which could result in beneficiaries’ inheritances being reduced.

It is not uncommon for executors and trustees to falsely believe that they temporarily can place estate or trust assets into their personal bank accounts, or vice versa, because they plan on moving the funds back to their proper place when they get the time. Even if the commingling of assets takes place as a temporary measure, it warrants the filing of a fiduciary misconduct claim to prevent further potential harm from being committed by the offending fiduciary.

Failure to Make Timely Distributions

Beneficiaries should keep in mind that even if the executor or trustee claims they will withhold your inheritance, this is usually just an empty threat, because if they follow through with it, they could have a misconduct claim on their hands for breach of duty.

If estate or trust administration has reached the point where the decedent’s assets have been marshaled and valued, the decedent’s creditors have been paid and all litigation surrounding the estate or trust has ceased, then it is the duty of executor or trustee to distribute the assets to their intended beneficiaries within a reasonable amount of time after filing a final accounting with the court and obtaining approval to make final distributions. A failure to provide beneficiaries and heirs with their rightful inheritances in a timely manner is cause for a fiduciary misconduct claim, as there generally are not many valid reasons for executors and trustees to withhold inheritances.

While trustees tend to have a little more discretion when it comes to withholding inheritances (in that they can delay a distribution if they believe a beneficiary will squander it, or use it for illicit purposes or to harm themselves), executors don’t generally have this capability.

Failure to Keep Trust Property Productive

During administration, trustees are not only responsible for preserving the assets of the trust, but also keeping trust assets “productive.” This means that if those assets are generally earning income or could be earning income, they should be, If a trustee allows a family member to reside in a property without paying a fair rent, or if they reside in the property themselves and refuse to sell it, it has a negative impact on the finances of the  trust, which, by extension, affects beneficiaries’ inheritances. This is why a trustee who violates this duty should be sued for fiduciary misconduct.

Take, for example, a trustee who is permitting one of the beneficiaries of the trust to reside in a trust property rent-free because they stand to eventually jointly inherit it with their siblings. While this may seem like no big deal, it may be to the other siblings, who also are entitled to this property and could be earning an income from it if their other sibling weren’t residing there.