How Can Trustees Avoid Problems With Beneficiaries?

Florida attorney Reed Bloodworth handles trustee defense for clients in legal disputes with beneficiaries. Based in Orlando, Reed is the managing partner of Bloodworth Law.

How Can Trustees Avoid Problems With Beneficiaries?

Reed explains that communication – or a lack of communication — typically gets trustees into battles with beneficiaries. So how can trustees avoid problems with beneficiaries?

Clear Communication With Beneficiaries

The trustee can avoid problems with beneficiaries by having very clear communication with all the beneficiaries. When trustees are calling or emailing, whatever the communication may be, the trustee needs to clearly communicate.

Pour-over Will And A Trust

The trustee’s job is to gather and collect all of the assets if the personal items are in the trust. Typically that happens when you have what’s called a pour-over will: a will and a trust that is created at the same time.

When someone passes away, the will says, “all of my possessions, unless otherwise specifically devised here in this will, all pour-over into my trust by operation of law upon my death.”

The Trustee Follows The Trust

It’s then the trustee’s responsibility to divvy things up into equal shares if that’s what the trust calls for to distribute them.

The trustee may need to explain “that I understand person X may have said, ‘you’re always going to get this, don’t worry,’ but they didn’t put that in the trust document I have to follow.

“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. If it’s personal property, we value it and distribute it into equal shares.”

Catalog The Assets

A lot of times, the best way to do that is to catalog all of the assets and see if the beneficiaries — with the trustee’s help — agree on how to distribute the personal property.

Beneficiaries often have sentimental attachment to things. But they don’t necessarily have a monetary value as a trustee views it.

Is Disproportionate Value Distribution OK?

Sometimes the beneficiaries may agree to a disproportionate value distribution and be perfectly OK with it because they get the things that mean something to them.

Now that’s an example of something that a trustee can work with beneficiaries on. They can communicate. And in a situation like that, if one or two beneficiaries are going to get items that are worth more than the others, the trustee will want to get a waiver and release signed pertaining to that.

Get An Order From The Court

If there’s any type of pending court proceeding, you may want to get an order from the court approving that. If there is no court proceeding, then as long as the beneficiaries sign off on release and waiver accepting these distributions, if that’s what they want, then that would be fine.

Work Together Or Work With An Attorney

The beneficiary and trustee may resolve this. But if a disagreement ensues, it may become a legal dispute.

Attorney Reed Bloodworth is a 2022 U.S. News & World Report Best Lawyer in Trusts & Estates Litigation. If you’re having a difficult time working things out with beneficiaries over a trust, talk with Reed about whether Bloodworth Law can help you or your family.