Serving as a trustee isn’t particularly fun. It means careful and even pedantic compliance with written instructions and state law, as well as many hours of asset management and paperwork. You may feel grateful that someone else stepped into that role so that you didn’t need to, but your attitude may change depending on how well they do their job.
While trustees often receive something of valuable consideration for their work, the reason they fulfill the role is often out of a sense of duty toward or respect for the person who created the trust. Occasionally, beneficiaries of a trust will have to challenge a trustee because they embezzle from the trust or put their own financial benefit ahead of what would be best for the assets within the trust or its beneficiaries.
However, a trustee can handle trust assets in good faith and still make mistakes that affect its resources. Can beneficiaries remove a trustee who has mismanaged assets?
A trustee’s mistake could cost others their security
It is true that, especially when it comes to an investment account or real property, one big mistake when deciding what to do with assets could cost every beneficiary of the trust by diminishing the resources available. A trustee has an obligation to do what is best for the trust and to maximize the value of the resources within it.
Incompetence or mismanagement can be a valid reason to initiate litigation to remove a trustee. If they announce that they intend to do something that will damage the trust or reduce its resources, beneficiaries may be able to go to court and obtain an injunction preventing such actions.
Protecting your inheritance is not frivolous
Some people worry that they will look unnecessarily litigious or even greedy if they make a complaint about a trustee’s actions or take them to court all out of concern over financial resources. However, the person who created the trust intended for those resources to support the beneficiaries or improve their quality of life. They would not want those assets unnecessarily diminished any more than the beneficiaries do.
Recognizing that incompetent asset management could be a viable reason to pursue trust litigation could help those worried about the assets in a trust.