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When your corporate trustee fails to properly handle trust assets

by | Jul 14, 2021 | trust litigation

Those with large or long-lasting trusts may realize that an individual trustee is not the best solution for their needs. Instead, they may benefit from hiring a corporate trustee. There is a long list of reasons why people turn to businesses to manage a trust.

The trust may contain primarily investment assets, requiring professional management. There could be family conflicts that make the person creating the trust feel uneasy about naming a family member as trustee. There could even be a desire to keep the trust operational for several generations, which means naming an individual is simply unrealistic.

Although corporate trustees can absolutely benefit people in some circumstances, they can also make terrible decisions about the maintenance or investment of trust assets. 

Professional trustees may be too busy to fulfill their fiduciary duty

Trustees have a fiduciary duty to the trust itself and its beneficiaries. They should do their best to properly maintain the assets in the trust and comply with the terms set in the trust documents.

A fiduciary duty is the strongest degree of legal responsibility that one person or business can have to another. It means putting the other party’s best interests above your own. Those who serve as a trustee by personal appointment may fulfill their fiduciary duty in part because they also have personal relationships with the beneficiaries of the trust.

The separation between a professional trustee and the beneficiaries of the trust could lead to apathy or a lack of adequate care when managing our investing assets. It might even mean that someone decides to perform transactions that benefit them or people they know at the expense of the trust or its assets.

You have the right to stand up to trustee misconduct

The beneficiaries of a trust can ask for the courts to intervene when a corporate trustee violates their fiduciary duty or fails to perform the responsibilities necessary for the administration of the trust.

Provided that you can show that someone did not exercise reasonable care or failed in ways that another professional or individual would not have, you may be able to convince the court to remove the corporate trustee so that someone else can take over managing or investing the aspect in the trust.

Recognizing that trust litigation is sometimes necessary to protect the assets in a trust can help you act appropriately when trustees make questionable decisions.

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