|Lynn A. Dean|
Estate Planning Attorney
When there are questions by family members of whether a trustee breached the fiduciary responsibility for a loved one’s estate, recourse is possible but can be timely and costly.
Case in point: A clients’ mom had passed away where the daughter, the clients’ sister, was the trustee. While mom was living, she had multiple strokes and sister decided to have major construction done to her house. She built two bedrooms, a bathroom and living area and moved mom in. Mom’s house and the rest of her assets were to be equally divided among all the children. The sister, who still lives in the house now claims there is no money left. The family believes that the sister spent all the assets all the while claiming the home reconstruction was for mom’s benefit. The second house (mom’s original property) is occupied by the sister’s child, who is not paying rent to the trust. The family asked “Is there any way to force pay back to the estate or have the sister removed as Trustee?”
These situations are unfortunate and not simple to answer. It is a good reminder of the importance of choosing a proper trustee for your Estate and to review who that is over time.
First, the family believes that the sister took advantage of her position as successor trustee, in order to benefit only herself. This is what we call “self-dealing.” While mom was alive, the sister was assigned to ensure that any monies spent were to benefit mom’s care. If mom was still living in the home when construction occurred, the first question would be: Did she consent to the work sister was doing? If she did, then there may be an uphill battle trying to persuade a court to force sister to pay back funds. Whether the sister breached her fiduciary duty to her mom by doing the home construction would be expensive to litigate.
If the sister does not distribute the remaining assets to the family and does not force her child living in the second home to move or pay rent, then there may be a case to remove her as trustee. Family members can request that the sister provide an accounting of the estate. She is required to account for all funds that came into her possession while acting as trustee.
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