Can Serving As The Trustee Of A Trust Impoverish You?

The web pages of the “trusts” practice areas of law firms that deal in estate law make it sound like trusts are a foolproof way to keep your money safe from everyone. What happens in the family stays in the family, and generational wealth can flow freely without interference from the court. If this were the whole story, then no one would hesitate to act as the trustee of an entity, virtually invisible to regulators, that enabled them to enrich their relatives, never mind that those relatives sometimes drive them crazy and provoke their anger. At least, people would appoint as trustee the family member with the highest tolerance for paperwork. There are more risks than that to serving as the beneficiary of a trust. Your role as a trustee makes you a fiduciary, which means that you have a legal duty to act in the best interests of the trust. If the beneficiaries of the trust sue you, and the court rules against you, it can order you to pay damages out of your personal funds. Therefore, it helps to have professional legal guidance before and during your duties as trustee. For help fulfilling your fiduciary duty as the trustee of a trust, contact a Tampa estate planning lawyer.

The Courts Can Order Trustees to Pay Damages From Their Personal Assets in Trust Litigation

The trustee is the person or entity, such as a financial management company or law firm, that has access to the funds in a trust. Pursuant to the instructions in the trust instrument, the trustee must make payments from the trust to beneficiaries. The trust instrument might also instruct the trustee to invest or sell trust property. Trustees can also receive payment for their services, but only in the amounts indicated in the trust instrument.

An appeals court in Florida recently ruled on the Miller v. Moore case. A beneficiary of the trust sued the trustee, alleging that he had paid himself too much money out of the trust assets. The court ordered him to repay the money he had taken from the trust for himself beyond what the trust instrument instructed him to pay himself. It also ordered him to pay a surcharge for the interest that would have accrued on the excess funds that he withdrew. The trustee appealed the decision. In his appeal, he argued that it was beyond the court’s jurisdiction to order him to pay his personal assets to the trust. The appeals court sided with the beneficiary and ordered the trustee to repay the money out of his personal funds. It reasoned that his role as a fiduciary made him legally responsible for the financial wellbeing of the trust.

Contact David Toback About Getting Paid for Your Services as Trustee

A Central Florida probate lawyer can help you get fair compensation for your work as the trustee of a trust.  Contact David Toback in Tampa, Florida to set up a consultation.

Source:

flprobatelitigation.com/wp-content/uploads/sites/837/2024/09/Opinion_2023-1402.pdf