- February 9, 2021
- Kelvin Birk
- Estate Planning
Yes, a beneficiary can sue a trustee. But a beneficiary must prove that a trustee has breached their fiduciary duty. A beneficiary cannot mount a successful challenge simply because he/she has a personal grudge against the trustee or because he/she simply feels the trust is unfair as it was created by the trust owner.
To mount a legal challenge, a beneficiary must show that there was malfeasance, conflict of interest or incompetence on the part of the trustee.
There’s a lot to know about trusts and estate disputes, and challenging a trustee is rarely something you want to do on your own. With the help of a skilled trust attorney, a beneficiary can understand their legal rights and determine whether there are grounds for a lawsuit against a trustee. Sometimes a resolution can be achieved through negotiation rather than pursuing litigation in court.
Cape Girardeau probate attorney Kelvin Birk has decades of experience in successfully representing beneficiaries in trust disputes. He has the legal knowledge, negotiation skills, and keen sense of anticipating outcomes. To learn more about how Birk Law Firm can help you challenge the activities of a trustee, contact us at 573-332-8585. We can answer your questions and explain your legal options. The initial consultation is free.
When can beneficiaries sue the trustee?
The best way to avoid trust litigation is to create a sound, orderly estate plan in the first place. But we understand that sometimes this doesn’t happen. Trusts can be poorly crafted or vague, trustees can be incompetent or unethical, and other inaccuracies or oversights can lead to disagreements among beneficiaries.
As an attorney, CPA and businessman who grew up on a farm, Kelvin Birk provides multidimensional professional services all in one law firm. Very few attorneys can do that. He is experienced at crafting customized estate plans. He has also challenged trustees on behalf of beneficiaries when the beneficiary was not being treated properly according to the terms of the trust.
A trustee has significant authority, but also responsibility, to administer a trust in a way that is consistent with a trust-creator’s stated wishes. While a trustee cannot predict the performance of financial assets, he or she has a fiduciary responsibility to act ethically and distribute assets according to the trust. Trustee fraud includes hiding assets, creating barriers to distribution, or exhibiting negligence or incompetence.
If you’re wondering when can beneficiaries sue the trustee, following are some examples. You may be able to challenge a trustee if they:
- Demonstrate “malfeasance” in the administration of a trust
- Avoid or neglect to distribute assets as proscribed in the trust
- Fail to pay creditors and taxes
- Exhibit conflict of interest or undue interest as it relates to the trust
- Prove incompetent to carry out assigned duties in the trust
- Illegally dispose of or divert assets for self-serving reasons
These are a few, but not all, of the actions that can be challenged in a lawsuit. A trustee doesn’t have to be intentional in the above actions – sometimes a trustee, especially if a family member, commits them because they are unskilled or overwhelmed. In other cases, the trustee is knowingly and willfully failing in their responsibilities for selfish reasons.
Statute of Limitations
A beneficiary has one (1) year in Missouri to file a breach of trust or fiduciary lawsuit against the trustee. The clock begins ticking when the beneficiary or his/her representative is sent/receives written notice that clearly discloses the existence of a potential error or mismanagement giving rise to a breach of trust claim.
Because of the short time in which you can challenge a trustee, it is imperative that you take action and contact a trust attorney promptly. If you are uncertain whether you have a legal claim but feel inappropriate trust administration is taking place, you should reach out to our firm. It’s better to be safe than sorry.
Criminal charges against a trustee
First, the only person who can file criminal charges against a trustee is the local district attorney. Embezzlement is a crime, as is misappropriation of funds. A beneficiary cannot threaten criminal legal action against a trustee to secure personal advantage over other beneficiaries. However, a beneficiary can pursue an action in civil court to secure monetary relief. It’s important to stay calm and avoid ongoing, heated arguments with family members or other beneficiaries in these cases. A legal approach is often a better approach. We can help with that.
Potential Outcomes of a Trust Lawsuit in Civil Court
With the help of a skilled trust attorney, a beneficiary’s lawsuit can result in a handful of outcomes, depending on the facts in the case. A beneficiary can:
- Replace the trustee
- Remove the trustee
- Terminate the trust
- Secure an appropriate distribution of assets
Attorney Kelvin Birk can help you achieve one of these outcomes or recommend another approach to negotiation that achieves your goals. As an attorney, he will pursue a legal strategy that is swift and the most economical in securing a favorable outcome.
Can a trustee go to jail?
Incarceration in jail or prison is not a frequent outcome for trustees who breach their fiduciary duties, but it’s possible. More common outcomes for trustees who fail to carry out their duties is removal or economic fines. It’s important to remember that, most often, the goal is to achieve monetary recovery rather than personal retribution.
Call a skilled trust attorney today
Kelvin Birk is a lawyer as well as a certified public accountant with more than 30 years of experience in accounting, tax and business consulting. He also possesses more than 20 years of legal experience. Whatever your legal situation, your attorney at Birk Law Firm can counsel you about legal strategies and tax implications.
Kelvin Birk’s style of representation focuses on being a strong negotiator to achieve a favorable solution, rather than running to the courthouse to launch expensive and protracted litigation. If you are a beneficiary contemplating legal action against a trustee, Birk Law Firm can help. We will answer your questions, assess your claim, and discuss your legal options. For a free initial consultation, contact us at 573-332-8585.