You are the lucky recipient of a generous inheritance, but that inheritance may come with a big catch. While many inheritances are given to the beneficiaries outright, meaning the money or other assets pass into the beneficiaries’ names to own and control, some trusts require inheritances to remain inside a trust for the lifetime of the beneficiary. When your inheritance remains in trust, there is usually a trustee who manages the trust assets. It’s possible for that trustee to have a big impact on your life.
Types of Trustees
If your trustee is a professional or corporate trustee who manages the trust assets wisely and provides benefits to you under the trust terms, then having your assets in trust could be great. You have someone else who handles all the headaches of managing money and paying bills while you reap the benefits.
On the flip, having a trustee who is not a professional, who has no idea how to properly handle a trust, and who is hostile to you, could turn your life upside down. This happens all too often when a trust is being managed by a sibling of the trust beneficiary. For example, let’s say your inheritance is held in trust for your lifetime but the trustee is your older brother, let’s call him Bob. Bob has some personal issues and has always been grumpy. You and Bob have never gotten along well and he always acts like a know-it-all.
Whenever you ask for money from your trust to pay your mortgage or buy a new car (all things the trust clearly allows), Bob grumbles. He asks for receipts and invoices and then refuses to get back to you for weeks. Once he finally does respond, he refuses your requests and tells you why you’re making “foolish” decisions. When you try to explain that the trust allows for distributions for these items, he snaps. He says things like “I am in charge now,” or “mom and dad wouldn’t want you to spend money like this,” or “you’ve always been irresponsible.”
The problem with Bob is he is a bad trustee. He does not understand that his number one job is to follow the trust terms. He is also supposed to treat you fairly and make an effort to provide you with benefits from the trust – not to look for reasons to deny your requests. Bob thinks he stands in the shoes of your parents and he can make the decisions about what to give you. He is mistaken. Your parents had that latitude while they were alive because it was their money. They could do whatever they wanted with their money. But your trust is not Bob’s money. Yes, Bob is the trustee and manages the trust in that respect, but you are the beneficial owner of the trust funds. The money is supposed to be used for your benefit.
How to Move Forward with this Trustee
When your money is trapped in an irrevocable trust that is managed by a bad trustee, you must take action. Trustees like Bob are not going to change. They have the wrong mindset. Many people think they need to remove Bob as trustee and that is one option. That said, trustee removal is not easy and will take filing a petition in court to seek Bob’s removal. But there are other options.
For example, under the probate code, you have the right to file a petition seeking an order from the court forcing the trustee to take certain actions. You can seek a court order requiring Bob to make distributions. If Bob fails to account to you, you can ask the court to order Bob to do so. You may also be able to seek a termination of the trust since Bob is making it impossible for the purpose of the trust to be fulfilled. What is the purpose of the trust? To provide you with benefits, of course.
In other words, there’s a host of remedies we can use to hold Bob’s feet to the fire. Bob should either do what’s ordered, be removed, or the trust can be terminated altogether. There is not just one path forward.
Do you have an irrevocable trust?
Our attorneys have terminated hundreds of irrevocable trusts for abused beneficiaries. We’ve also recovered more than $400 million and helped hundreds and hundreds of clients regain their dignity as a trust or will beneficiary through litigation – if you believe you’ve been the victim of inheritance abuse, tell us your story to see if your case qualifies for a free consultation. We’re here to stand, fight and win for you.
Call (877) 408-3813 or reach out online to consult a trust contest lawyer.
