ASK TOM: What are Red Flags for Beneficiaries of Trusts and Estates

If you are a beneficiary of a deceased person’s Trust or Estate, and you are experiencing the following, you are in the red flag zone where something needs to be done:

1. You don’t see the bank statements, even when you ask for them.
2. You don’t get copies of financial statements at death and on an annual basis.
3. You aren’t aware of where the money is going.
4. You don’t know what the investments are.
5. You don’t know what the property sold for.
6. They are ignoring your calls.
7. They are angry when you ask about it.

The law is simple.  The personal representative, executor and trustee all have what is called a fiduciary duty to you.  The law explicitly requires them to answer all of the concerns like those above.  Managing an estate, trust or family organization is not the same as managing one’s affairs.  In many families the custom is to be tight and secretive about finances.  When a member of the family becomes a fiduciary, it may be hard for them to open up.  But open up they must.

The duty of a fiduciary is to act for the beneficiary or other owner as a reasonable person would act in managing their own affairs.  In other words they must act for the beneficiaries or owners interests, rather than their own interests. They must favor the beneficiary over themselves. 

All too often the failure to open up is due to misconduct by the fiduciary.  The fiduciary may have spent some of the money on their own debts.  They may have become the victim of a scam or a Ponzi scheme.  They may have put the property in their own name.  They might simply be failing or do not know how to keep proper records.  Unwise or imprudent investments are a breach of the fiduciary duty.  The law makes the fiduciary liable for any losses.

The most common kind of lawsuits in estate and trust litigation stems from what we have been discussing.  Generally the sooner someone acts to set things straight between the personal representative, trustee or manager and their beneficiaries, the more likely some of the property can be protected.

JensenBayles, LLP provides a broad spectrum of legal services. Thomas J. Bayles has been actively providing advice in the areas of trusts, wills, probate and tax planning in the St. George market for over 18 years. Please visit our web site www.jensenbayles.com or call 435-674-9718 and ask for Thomas J. Bayles. The information in this article is for educational purposes only and is not intended to be construed as legal advice.