Number One Reason Trustees Have Disputes With Beneficiaries?
The number one reason trustees have disputes with beneficiaries is poor communication or a lack of communication, said Orlando, Florida, trust litigation attorney Reed Bloodworth.
“They want to know the status of the assets like how much money is there, where’s the money, how’s it being kept, what’s going on?” said Reed who handles trustee defense for clients facing litigation against beneficiaries in Florida. “A trustee is required to provide an annual trust accounting. But that’s not always enough. They usually have follow-up questions that should be answered.”
As Founder and CEO of Bloodworth Law in Orlando and Winter Haven, Reed has seen most of the reasons trustees have legal disputes with beneficiaries. Reed explains that communication is imperative to maintaining strong relationships with all beneficiaries.
Communication May Prevent Disputes
Reed said he believes that beneficiary updates may prevent many disputes with beneficiaries.
“I think it’s important for trustees to communicate much more often with the beneficiaries,” Reed said. “You don’t want to just say, ‘here’s your annual trust accounting,’ and leave it at that.
“I think that one way to avoid getting in trouble, or, avoiding legal issues, or, avoiding upsetting beneficiaries is to communicate with them — more often.”
Send Monthly Report To Beneficiaries
Reed explains that one thing corporate trustees do is to send a monthly asset report to beneficiaries. It’s almost like a monthly accounting, and that’s something that is very wise. It’s proactive, and it’s the type of communication and information Reed thinks beneficiaries really appreciate.
But, when you have an individual trustee, they may not be equipped to do that. It’s something a large trust company can do. They have all their portfolios set up and it’s easy for them to print and mail or email these monthly updates.
An individual should be keeping all of their records in real-time, but they may not be able to send them a monthly update.
Answer Beneficiary Questions
But what they can do is this: whenever there is a question by a beneficiary, they should answer it. Even though a trustee is only required to do an annual accounting, not a monthly accounting because that can be expensive.
Trustees hire an accountant who does trust accountings, to prepare the annual trust account accounting. This can be the one annual accounting but maybe include a semi-annual or quarterly update.
Offer Additional Updates To Inform Beneficiaries
Additional updates inform the beneficiaries to make them aware of what’s happening because that’s when people start to worry — when they don’t hear from their trustee, or when their trustee doesn’t respond. I think that’s probably the number one thing that can get a trustee into a legal situation is failure to communicate or poor communication.
Work Together Or Work With An Attorney
The beneficiary and trustee may resolve many questions or problems this way. 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 trouble working things out with beneficiaries over a trust, talk with Reed about whether Bloodworth Law can help you or your family.Consider sharing this post