This Is Why Trustees Get Into Trouble With Beneficiaries

Florida attorney Reed Bloodworth handles trustee defense for clients facing litigation against beneficiaries.

As Founder and CEO of Bloodworth Law, Reed sees why trustees get into trouble with beneficiaries. Usually it’s because of a lack of communication between parties.

“There are many, many causes of actions against trustees that we see every day,” Reed said. “I would say the biggest issue I see with trustees and perceived issues by beneficiaries is a lack of communication.”

Is Something Truly Wrong, or, Is Someone Unhappy?

“Trouble is relative,” Reed said. “Is it something the trustee truly did wrong, or are the beneficiaries unhappy because the trustee isn’t doing exactly what they want?”

Trustees Follow Trusts Exactly

Reed explained that beneficiaries may not realize that trustees are required by Florida law to follow exactly what the trust says should be done.

When you’re talking about a trustee, the claims you see most often are a failure to provide an accounting, breach of fiduciary duty…it could be a myriad of things.

Anyone Can File a Lawsuit

Anyone can file a lawsuit for anything. Whether or not it has merit is a completely separate matter. People get sued all the time for things that are frivolous. Then it’s up to the person and their attorney to file either a motion to dismiss or raise the appropriate affirmative defenses to deal with it.

Beneficiaries Can Allege Many Things

Beneficiaries could allege that a trustee used trust funds for their personal benefit, or that the trustee sold the trust asset for less than they should have, or they sold an asset to a family member or to someone that’s not an arm’s length transaction, the trustee didn’t properly invest the portfolio in the trust.

Typically, when a beneficiary is dealing with a trustee, most times, not all the time, but most times, it’s in a time period in which the beneficiaries have just recently lost a family member, most often a parent.

Promise Made: “Oh, you’re going to get that, don’t worry”

The parents will have told the trustee or told the beneficiaries certain things about what they can expect to inherit and might have made comments about personal items. Like, “oh, you’re going to get that, don’t worry.”

You Won’t Get It If It’s Not In The Trust

But the actuality is that all these things mentioned and discussed are often not in the trust document. So, you won’t get it if it’s not in the trust.

Trustee May Be The Bearer Of Bad News

When you become a trustee, for example, a third party trustee, somebody who’s not a family member or a corporate trustee, they have the actual trustee document. That’s what they have to follow according to Florida law.

Beneficiary Says ‘You’ll Get This’

You often see beneficiaries emailing and calling trustees saying, ‘hey, Mom always said I would get the medal display from Dad when he was in the army. They promised I’d get it!’

Well, that may not be a specific devise (a gift, a bequest, or a legacy) in the trust. It might just say, “the personal property is to be divided up equally amongst my four children.”

Trustee: “I understand, but trust doesn’t say that”

The trustee’s job is to gather and collect all of the assets and if the personal items are in the trust. Trustees need to explain “that I understand your mom or dad, or, whoever, may have said, ‘you’re always going to get this, don’t worry,’ but they didn’t put that in this document I have to follow.”

At this point the trustee can explain: “Now, you may get that item. But what we have to do is value everything that’s in the trust and follow the trust rules in how it’s to be divided, and if it’s personal property, we value it and distribute it into equal shares.”

Work Together Or Work Through An Attorney

The beneficiary and trustee may work on this together, or, instead, if an argument occurs, it may become a legal dispute.

Attorney Reed Bloodworth is a 2022-23 U.S. News & World Report Best Lawyer in Trusts & Estates Litigation. If you’re having a difficulty with a beneficiary over a trust, talk with Reed about whether Bloodworth Law can help you or your family.