Whether you are thinking about setting up a trust or you are someone affected by the management of a trust, one of your primary concerns may be whether a trustee is managing it properly.
Unfortunately, there are situations where a trustee fails in its duties, which can have considerable legal and financial impact on others. As such, it can be crucial to know what mismanagement might look like and what you can do to prevent or stop it from happening.
In accordance with the Minnesota Uniform Trust Code, trustees have numerous responsibilities. Failure to perform these responsibilities can lead to claims of mismanagement. This might include:
- Putting his or her interests before the best interests of beneficiaries
- Mixing trust money and assets with his or her personal accounts
- Failing to provide proper notification to beneficiaries
- Improperly investing assets
- Deviating from the instructions of the trustor
- Failing to perform job duties in a timely manner
- Refusing or being unable to cooperate with beneficiaries
- Carrying out transactions affected by a conflict of interests
- Failing to exercise reasonable caution, care and skill in administration duties
A trustee may intentionally act improperly or become incapable of carrying out his or her duties due to illness or incompetence. In either case, there may be grounds for removal of the trustee based on mismanagement.
Removing a trustee
If you are creating a trust, you should know what your trustee must do to administer a trust properly. If there is a chance someone may fail to act responsibly or be unable to carry out these duties, you would be wise to consider having another person serve as trustee.
If you are a beneficiary or co-trustee and have concerns about someone currently mismanaging a trust, consider discussing your legal options with an attorney. Doing so could allow you to preserve the intentions of the trustor and prevent further damage or loss.