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What can you do when a trustee breaks your trust?

| May 8, 2020 | Estate & Trust Planning |

When making a trust, a trustee is generally chosen because they are reliable, honest, and have a fair amount of financial acumen.

However, while a trustee might  have demonstrated these qualities at first, beneficiaries might find that their trustee is breaching the duties the trustee owes to the trust, and the beneficiaries.

Indeed, tensions between trustees and trust beneficiaries are common, and often lead a beneficiary to ask if their trustee can be removed by the Court.

While mere tension and/or frustration with a trustee is rarely a legitimate basis for removal, certain acts by a trustee – such as self-dealing, financial mismanagement, or outright theft – can all be grounds for a trustee’s removal.

The most common way of removing a trustee in New York is to Petition the Surrogate’s Court and ask that the trustee be removed.

The Petition must detail the trustee’s wrongdoing, and set forth the harm that they have caused to the Trust and/or the beneficiaries that warrants the trustee’s removal.

If an agreement between the trustee and the beneficiary seeking removal cannot be reached during the course of the subsequent litigation, eventually a Hearing will have to be conducted to determine if removal of the trustee is appropriate.

The Hearing before the Surrogate’s Court is the equivalent of a Trial in the Supreme Court. The evidentiary burdens are significant, and in the absence of clear wrongdoing that the Trustee has harmed the trust and/or the beneficiary, the Court will not remove a duly appointed trustee.

Nevertheless, there are – unfortunately – many cases where the trustee’s wrongdoing is established, and their removal is warranted.

In these cases, the Court is swift and decisive in removing the trustee so as to protect the trust and the beneficiaries as best as possible under the circumstances.

Pending Trustee removal – and if the evidence supports the Court doing so –  the Court also has the power to suspend the trustee from acting without a Hearing, which further serves to protect the trust and its beneficiaries by offering immediate relief to the parties being harmed.

If a trustee is found to have harmed a trust and/or its beneficiaries, not only is removal often warranted, but the trustee is obligated to pay the trust back for any losses the trustee caused due to their wrongdoing. In many situations, the beneficiary can also be reimbursed from the trays for the legal fees the beneficiary incurred to prove the trustee’s wrongdoing.

Ultimately, there are no “winners” when a trustee breaches tier duties to the trust and their beneficiaries. That being said, beneficiaries who have been harmed by their trustee are not without recourse, and should seek removal when and where appropriate.

If you are a trust beneficiary who believes they have been harmed by their trustee, contact Bashian P.C. and see if removal of your trustee by the Court should be sought.

 

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