Dishonesty, Disloyalty and Other Problems in Estate Administration

On Behalf of | Apr 15, 2021 | Estate Planning

Losing a loved one is painful; having to navigate a complicated and contentious legal battle in the wake of that loss can make the situation even worse.

Unfortunately, this is precisely what Minnesota families face when dishonest or disloyal parties play a role in administering an estate. These people can cause considerable delays, strained familial relationships and financial repercussions, so it can help to know what to watch for and how to minimize the conflict that can arise. That being said, it’s equally important to realize when a perceived breach is merely that: a misinformed perception.

Administrators breaching their fiduciary duties

Throughout the administration of an estate, the personal representative and/or trustee has a fiduciary duty to act in the best interests of the estate and its beneficiaries. However, dishonest or disloyal people might take advantage of this role and breach their fiduciary duty.

Some of the ways people breach this duty include:

  • Self-dealing, which involves using your position as a fiduciary to make decisions that benefit you rather than a decedent, ward or beneficiary. Some examples of self-dealing include a trustee using funds to make investments in their own business or collecting funds from a trust that are not owed to you.
  • Failing to distribute funds to trustees per trust instructions
  • Artificially inflating their rates or fees to receive more compensation than they deserve
  • Missing deadlines to pay bills or provide notification
  • Making reckless or unwise financial transactions using funds owed to heirs
  • Losing or mishandling estate property and funds

These actions can trigger legal complaints for which the fiduciary can be liable.

But it’s also important for heirs to understand that the speed by which they receive their inheritance is not entirely in the personal representative’s hands. The personal representative must often wait for third parties (e.g., investment account administrators and tax accountants) to provide them with information before they can do their job. In addition, the personal representative must sometimes wait for the court to set hearings or issue orders before the personal representative can take the next step toward distributing the estate to the heirs. When heirs are impatient, the personal representative’s speed (or lack thereof) is sometimes mistaken for mismanagement, when in fact it is nothing of the sort.

Before starting a legal process that will cause the Estate to lose funds, make sure you understand the cause of any delay.

Heirs creating problems for others

Administering an estate can be highly emotional and stressful, which can push personal relationships past their breaking points.

For instance, someone who does not have a good relationship with others in the family might create conflict simply to drag the process out and drain funds to punish the others. If someone is jealous or angry about terms of a person’s will, or perhaps about being intentionally omitted from a person’s will, they might contest the will, even if it upsets other people.

Parties who are combative or untrustworthy could make estate administration far more complicated than it needs to be. Thus, just as you should be cautious when nominating a personal representative and/or trustee, it is also a good idea to explain your reasoning for putting any conditions or limitations on inheritances.

Finally, if you are in a position to serve as a personal representative or trustee consult an attorney to ensure you fulfill your duties appropriately and lawfully to mitigate the likelihood of family conflict. Heirs, you too can consult an attorney to make sure your expectations are both reasonable and meritorious before initiating suit. Estate administration is more likely to go smoothly when everyone operates within the same rules and expectations.

Archives

FindLaw Network