What Are Your Rights When You Don’t Trust a Trustee?
The revocable living trust is beginning to overtake the last will and testament as the most commonly utilized estate planning instrument for the distribution of assets upon death. Much of this popularity is due to recent updates to the Wisconsin Trust Code which took effect July 1, 2014, making the implementation of trusts substantially more user-friendly. Importantly, revocable living trusts allow individuals to disburse and dispose of assets outside of the costly and time-consuming probate process.
One of the primary attractions to the revocable living trust is that you, as creator of the trust (grantor), have the ability to name specific individuals or entities (trustees) who will be responsible for the management of trust property upon your death or incapacity. Trustees have fiduciary duties to the named recipients of the trust proceeds (beneficiaries), and are responsible for the day-to-day maintenance and investment of the trust property for the benefit of those beneficiaries. Trustees are permitted to collect statutorily prescribed fees from the trust in exchange for their services. But what happens if the named trustee is no longer trustworthy? What recourse do beneficiaries have?
Chapter 701 of the Wisconsin Statutes (otherwise known as the Wisconsin Trust Code) sets the legal parameters for the establishment and administration of trusts. This Chapter also imposes certain duties upon the trustee for the financial protection of beneficiaries. Some of those duties include:
-Keeping adequate records detailing the administration of the trust
-Incurring only costs that are reasonable in relation to the trust property
-Disbursing net proceeds from the sale of trust property to the beneficiaries
-Sending trust beneficiaries an annual report of the trust property, liabilities, receipts, and disbursements, including the amount of the trustee’s compensation
-Responding promptly to beneficiary requests for information regarding the trust administration
-Investing and distributing trust property with impartiality if more than one beneficiary is involved
-Filing and paying taxes on trust income
Failure to perform any of these duties can constitute a material breach of trust, with applicable legal remedies for beneficiaries pursuant to Wis. Stat. § 701.1001. Beneficiaries who believe a trustee has breached trust may petition the court to suspend or remove the trustee and appoint a successor trustee. They may also ask the court to award them the value of the trust property lost as a result of the breach. Beneficiaries may also petition the court to require a trustee to provide a detailed accounting of all sales, purchases, investments, and disbursements made on behalf of the trust during their tenure as trustee.
If you are a beneficiary of a trust and suspect a trustee has failed to meet the obligations required by state law, you have options to protect your financial interest in trust. First, you should consult a qualified attorney. John M. Kelly, Attorney at Law, LLC has 42 years of experience in the area of trust and estate planning, ranging from the drafting of simple wills to the administration of complex trust agreements. Contact Attorney Kelly today for all of your estate planning needs.