Legal Blog

The Weekly Scenario: Actions of a Trustee

Question: Can the beneficiary of a trust do anything about the actions (or inactions) of the Trustee?

Answer: The beneficiary of a trust will typically not have control or direct access to the trust funds. This is the job of the Trustee. A common fear among beneficiaries is that the Trustee may not do what’s in the best interest of the beneficiary and, if that were to take place, the beneficiary may not be able to do anything about it.

Choosing the right Trustee is one of the most challenging and important decisions in creating a trust. The Trustee could be charging the trust high fees, not properly administering the trust, or being unresponsive to the needs of the beneficiary.

If the beneficiary has grounds to believe that the trustee is not acting lawfully or fairly as a fiduciary, the beneficiary has the right to petition a court to remove the trustee and bring related actions to address the trustee’s conduct. However, these procedures, whether in or out of court, can be time-consuming and costly, and in most cases, merely not getting along with the trustee may not be enough to justify removal. Moreover, the beneficiary may not have the wherewithal to initiate the action or the legal capacity to comprehend what do so.

To avoid these types of obstacles, estate planners often draft the trust document to include mechanisms for removing a trustee (including defining reasons for trustee removal). The trust will in most cases also include provisions for trustee resignation, the appointment of successor trustees, and the appointment of a “trust protector.”

The trust protector is a person or entity chosen by the person setting up the trust to keep an eye on trust matters such as the trustee’s performance. Most trust protector provisions give the protector the right to remove the trustee and appoint a new one.

 

As always, if you have any questions or would like to learn more, please contact Steve Shane at sshane@offitkurman.com or 301.575.0313.

ABOUT STEVE SHANE

Steve Shane Casual Small

sshane@offitkurman.com | 301.575.0313

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 140 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eleven offices serve individual and corporate clients in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

You can connect with Offit Kurman via our Blog, Facebook, Twitter, Google+, YouTube, and LinkedIn pages. You can also sign up to receive Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.

MARYLAND | PENNSYLVANIA | VIRGINIA| NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC