Executors or personal representatives have to carry out an individual’s final instructions and fulfill their outstanding personal obligations. Trustees may spend years managing and distributing the resources that funded a trust. Both personal representatives and trustees have a fiduciary duty to the beneficiaries who receive assets from an estate or a trust.
They should do their best to fulfill their responsibilities in a manner that optimizes what beneficiaries receive. Most fiduciaries ensure that they comply with all instructions provided in trust or estate planning documents while simultaneously upholding state statutes. Unfortunately, some trustees and personal representatives struggle to fulfill their obligations.
Some overtly violate their fiduciary duty by putting their own interests ahead of the interests of beneficiaries. Others make mistakes due to incompetence or fail to act in a timely fashion, thereby diminishing the value of estate or trust resources. In such scenarios, beneficiaries may elect to take legal action.
What solutions can the courts offer for those concerned about the conduct of trustees or personal representatives?
Removal and replacement
There are various circumstances that may justify a request for the probate courts to remove and replace a personal representative or trustee. Proof of actions that diminished the value of resources, a breach of fiduciary duty or circumstances that diminish personal capabilities could justify a request to remove a fiduciary from their position. In cases where one party has proven incapable of fulfilling their obligations or unwilling to put beneficiaries’ needs first, replacing them with someone else might be the best option available.
Financial accountability
Sometimes, personal representatives or trustees embezzle. Their actions cost beneficiaries hundreds or thousands of dollars. Other times, they engage in self-dealing, which can also cost an estate or trust a significant amount of money. Particularly in scenarios where conduct was intentional and financial losses are significant, the courts may opt to hold a personal representative or trustee financially accountable for the negative impact their actions have had on the value of an estate or a trust.
Injunctions to prevent transactions
Perhaps a trustee recently agreed to sell their immediate family member trust resources for less than their fair market value. Businesses, real property and other valuable assets can comprise a significant portion of the overall value of an estate or trust. In scenarios where there is a plan to sell those resources for less than their fair market value, beneficiaries could ask the courts to help. The courts can issue an injunction preventing the completion of a transaction that could prove unfavorable for beneficiaries. Particularly in scenarios where the fiduciary or someone in their inner circle might benefit from the transaction, the courts might agree to intervene.
Initiating probate litigation to address issues related to the conduct of a personal representative or trustee can help to preserve assets intended for the support of beneficiaries. People who understand how the courts can help may recognize scenarios in which taking action is in their best interests.