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Help! My Trustee Is A Fraud!

Help! My Trustee Is A Fraud!

 

HELP!  MY TRUSTEE IS A FRAUD! 

               Trustee’s should be trusted, but are not always trustworthy.  In fact, it’s unfortunately not uncommon for a chosen trustee of a trust to be acting fraudulently or in a manner which is not in line with their powers and duties as trustee.  As an inheritance attorney St. Peters, I often get frantic calls from beneficiaries in this situation.

If I believe there is malfeasance by a Missouri trustee, I will either file litigation or send a demand letter seeking information related to the trust.

I’m A Trust Beneficiary, What Rights Do I Have?

Remember, if you are a beneficiary, you are entitled first and foremost to a copy of the trust.

Second, you are entitled as a beneficiary to an accounting or reporting of trust activities from the trustee.  How often depends on the terms of the trust, but this is a common area where trustees engage in improper behavior:  they don’t keep beneficiaries informed of what’s going on with the trust assets.

I’m often surprised at how long clients will endure the lack of information from a trustee.  In some cases in can be months, but it’s just as often years.  Years of excuses or non-responses from a trustee.

In these cases, you must take action.  You must hire an experienced inheritance attorney, St. Peters, Missouri to decide the best course of action.  In some cases, it’s best just to file litigation right away, assuming there is a colorable claim of malfeasance by the trustee.  Examples would be not responding to communications from a beneficiary, not providing the accounting, or misappropriation of trust funds or some combination or all of these things.

If your trustee is supposed to be sending you money every month and suddenly is jetsetting around the world, there’s almost definitely something wrong.

Okay, I’ve Got A Lawyer, What’s Next?

If there’s misconduct by the trustee, the course of action is usually to file litigation, often in an expedited procedure called an injunction hearing.  The idea with an injunction hearing is you have enough information of bad conduct that your attorney can show a likelihood of success in the pending lawsuit, but you need immediate action to stop any bad conduct.  From there, the court can demand that the trustee account within a certain amount of time, temporarily remove the trustee and appoint someone else or take other action.  The point here is that you have to show an emergent situation.

Ultimately, the goal would be to permanently remove a bad acting trustee, obtain a damage award for misconduct, save assets from being wasted and track down where trust funds went.

Can I Get My Attorney’s Fees Paid For?

This is a common question from beneficiaries in this situation and I’m completely sympathetic to it.

The answer is it depends.

The court has discretion to award fees, and often will if the beneficiary is successful.  Now, the problem from where do those funds get paid back?  Well, bad acting trustees usually don’t take money from a trust because they want to invest it in gold.  They usually have blown through at least part of the money and getting money back after a judgment is obtained is a completely new ball of wax.

Conclusion

In lieu of that, or often in addition, the beneficiary can usually be paid for out of the trust proceeds, if there are adequate funds left.  This would almost certainly be the case where there are other beneficiaries who have benefitted from the litigation.  In that case, the judge might apportion the fees to be paid on a pro rata basis among the beneficiaries, most likely from their portion of the trust.

A final piece of advice:  It’s 2018.  Most attorneys practice in a couple of practice areas.  Some still practice in many.  This situation, however, requires a specialist in probate litigation.  Knowledge of the judges, special procedures in particular probate divisions in different counties and the law, most importantly, is really an advantage.  A divorce lawyer who just happens to be a nice guy and your friend shouldn’t be your counsel in this type of case.  Hire someone with experience and make sure that they can back up their experience when you meet with them.

 

Serving As Trustee of A Trust? Not As Easy As It Looks!

Serving As Trustee of A Trust? Not As Easy As It Looks!

SERVING AS A TRUSTEE OF A TRUST:  NOT AS EASY AS IT LOOKS

One of the services provided by Legacy Law Center is trust administration.  When a person passes away with a living trust (or other type of trust) in place, the assets in the trust must be administered, i.e. managed and/or distributed according to the terms of the trust document.

Serving as a trustee sounds like a glamorous position.  You’re in charge of money and you have a lot of power over that money, right?  Well, it’s not that simple.  For starters, a trustee is a fiduciary.  A fiduciary is a person who has the power and duty to act on behalf of another person (usually referred to as a “beneficiary”) under circumstances that require total trust, good faith and honesty.   A fiduciary must avoid self-dealing (buying trust property themselves at a discount for example) and must avoid conflict on interests.

Here’s where things get tough for most trustees.  They are in charge of a trust in which they are likely a beneficiary and other family members are beneficiaries as well.  Even in the best of families, one person in charge of significant assets is going to create circumstances in which the trustee’s moves and motives are questioned at every turn.

“Why was Mom and Dad’s home sold and not kept?”

“That accountant the trustee hired is too expensive, they should have used my accountant. “

“The trustee is using trust assets for himself.”

“What happened to Uncle Dave’s fabulous gun collection?  Everything just disappeared.”

Rest assured, in most family trusts, once the assets are in control of the trustee, the worst assumptions and second guessing will begin.  In some families it starts on the day of the funeral.  If the trustee lets things fester, trust litigation can develop.

I’ve seen circumstances where the trustee could not take the emotional toll that the role put on them.  They were desperate for my firm to help.   Hiring a trust attorney to assist in the administration of the trust can create a firewall between the trustee and beneficiary while ensuring the trustee carries out their duties effectively.  For example, in the situation where the beneficiaries are already doubting the moves of the trustee even before they have the assets in their control, the trust attorney can send out a letter stating that the beneficiaries are welcome to contact the firm for updates but that updates will come via letter once they are necessary.  A letter from the attorney outlining the timeline for resolution of the trust is often a good way to set expectations.  When that letter comes from the trustee, second guessing can only worsen.

Our firm does not draft trusts without a no-contest provision which states that any beneficiary who files a lawsuit contesting the trust potentially loses their inheritance for doing so.  Now, there are exceptions to these provisions, but courts will uphold them on the belief that if the grantor of the trust (the creator of it) wanted that provision, they meant for it to be enforced.

Remember this as well:  The trustee in most trust situations does not have to rush through the process of identifying assets and distributing them.  That’s a competing problem for a trustee because working too fast can lead to mistakes and a fiduciary that makes mistakes can be personally liable. 

Ultimately, the best move a trustee can often make is to utilize the provision in the trust allowing them to hire professionals to handle the investing of trust assets (financial advisor), to account for them (CPA) and to deal with the legal issues of the trust (attorney).  Once these professionals are hired, a trustee will often find that the mob puts down their pitchforks, that a path with an end in sight develops and that they handle their duties more effectively and efficiently.

One more thing:  We always remind our trustees that they were chosen for a reason and their crazy brother and angry sister were passed over as trustee for a reason.   You were the one chosen because you were the most dependable.

 

 

Trust Administration in Missouri…

Trust Administration in Missouri…


TRUST ADMINISTRATION IN MISSOURI:  9 STEPS

Avoiding probate is one of the best aspects of having a living trust.  Administering a trust after a person dies is much easier and cost effective than the probate process.  That does not mean there are not steps to complete for administering a trust, however.

Here are the 9 steps for administering a trust in Missouri:

  1.  Making an inventory of assets.   All assets held by the trust should be identified, including determining title and ownership of the trust assets.  If some assets are not owned by the trust, a separate probate estate might need to be opened.
  2. Valuing of assets.  The valuation of assets has important income tax, capital gains tax, property tax and estate tax implications.  Depending on the asset, a formal appraisal might be required.  Accounts are easy since statements will provide valuations.
  3. Allocating of assets.  The trust terms will dictate what assets are to be allocated to sub-trusts or to a surviving spouse or both.  Technical considerations must be made to determine where certain assets should be allocated.
  4. Asset retitling.  Each asset must be titled to the proper trust in order to maintain protection from estate taxes, creditor claims and Medicaid.  Our firm can assist in preparing titles and transferring assets quickly.
  5. Obtaining a taxpayer identification number.  Once a trust becomes irrevocable, a taxpayer identification number (a TIN) must be obtained from the IRS.  To do so, a Form SS-4 must be filed.  Caution must be taken to ensure that the trustee will be recognized by the IRS and will recognize and respond to inquiries from the trustee.
  6. Determination of need to file Form 706.  A married couple has generally no estate tax payable upon the first death because of the unlimited marital deduction.  A Form 706 is a federal estate tax return.  Filing this form will establish the value of assets.
  7. Filing of Form 706.  A federal estate tax return must be filed within 9 months of the date of death.  Since Missouri does not have an inheritance tax, there is no need to file a state estate tax return (and there is no such thing).  Our firm has experience in preparing these returns.
  8. Filing of Form 1041.  A Form 1041 is often required to report income taxes.  There are other filings as well, including Notice of Fiduciary Relationship and Request for Discharge of Personal Liability.
  9. Distribution of assets.  Eventually assets will need to be distributed from the trust and will be able to be distributed.  Specific distributions and residual distributions must be carried out.

Keep in mind that in addition to the above, a trustee must also, collect assets of the estate, pay bills of the decedent before their death, during the administration of the trust and bills directly attributable to the passing of the decedent (i.e. funeral bills, medical bills).  Any other directions in the trust must also be carried out.

Trustees ultimately must carry out the terms of the trust as provided in the document.  This can lead to a trustee exposed to liability, potential legal penalties and subjected to litigation.  Trust documents always allow a trustee to obtain legal counsel and a trustee should never attempt to administer a trust without the assistance of an attorney.

Family of Robin Williams Involved In Estate Litigation

Family of Robin Williams Involved In Estate Litigation

FAMILY OF ROBIN WILLIAMS FIGHTING OVER HIS ESTATE

Mr.  Williams hanged himself last year at his home in California.  He apparently had created an estate plan but a dispute has resulted between his wife and his children over the distribution of his personal property (a very common source of disagreement in many estates) and the cash needed by wife to maintain the home which was distributed to her out of the estate.  Given the wealth of the late actor, we can assume the home was large and thus the annual maintenance to keep it up was a number which could be (and is being) disputed between the children and the wife.

Arguably, these details could have been included in the estate plan created by Mr. Williams.  The annual maintenance costs in prior years could have been figured and an estimated figure obtained, assuming higher costs in the future.  Nevertheless, it appears that was not done and now his survivors are fighting it out in court.  This not only wastes time and energy, but creates bad blood among family members, all of whom have undoubtedly been devastated by the loss of their father and husband.

The lesson here is that estate litigation can be avoided with proper and thorough estate planning.  The estate plan here probably just needed to be more specific as to the maintenance costs for the home for the wife.  As the article states, however, the family has already received many differences which is good to hear.  Often estate litigation cases can drag on for years without a resolution and their costs can be staggering.

Contingency fee probate litigation….

 

Duel

 

A contingency fee agreement is a type of legal fee agreement in which an attorney agrees to litigate your case without being paid for the legal fees until money or property is distributed to you.  This can mean that you have less risk of loss if the dispute is unsuccessful.   Our law firm will sometimes to a case on a contingency fee basis for larger probate and trust litigation matters in Missouri.  Usually we will only consider a case for this type of litigation if it involves more than $250,000.

Our firm is unusual in that most law firms that practice in the area of probate and trust litigation will only consider taking these cases if the client can pay fees on an hourly basis.   In some cases we will start a case on an hourly or flat fee arrangement and then consider a contingency fee arrangement after we have had more of a chance to investigate the case.

Contingency fee agreements can be well suited to probate and trust litigation.  Typically, in probate or trust litigation one or more children have been disinherited or have had their inheritance greatly reduced and one child or a non family member will receive most or all of the estate.

In these cases the child who will receive the bulk of the estate has control of the money and can often use it to hire an attorney to defend the challenged will or trust.  The children who are contesting the will or trust have to use their own financial resources to fund their litigation.  If they don’t have the financial resources to hire an attorney on an hourly basis then they may be left with two choices. First, don’t file the case.  Second, find a lawyer who will take the case on a contingency fee.

There is no one way to pay for the cost of probate or trust litigation.  Each person must evaluate their own case and circumstances to determine if an hourly rate or contingency fee makes the most sense for them.

If you have a trust or probate dispute in St. Charles County, St. Louis County or anywhere in Missouri, call Legacy Law Center to discuss your case and your options.