What sort of behaviors may result in a lawsuit over a trust?

| Jul 13, 2020 | Estate Litigation

Like most other people, you would probably choose a person to administer your trust who you believe will respect your wishes, properly care for the assets in the trust and appropriately deal with the beneficiaries. At least, this is what you hope will happen.

Unfortunately, whether by mistake or design, not all trustees will fulfill their obligations to you, the trust and the beneficiaries as you intended him or her to do. When that happens, the trustee’s behavior could ensue risk to the trust assets and the beneficiaries.

What kinds of things could go wrong?

Many things could go wrong during the administration of a trust. The items outlined below represent the more common ways that the administration of your trust could go wrong:

  • All your beneficiaries could request that a Nevada court remove your trustee if they believe he or she is not serving their interests in the best way possible.
  • If you appoint two or more trustees who are supposed to work together, but disputes arise between or among them, the court may remove one or more of them, especially if their lack of cooperation puts the beneficiaries or the assets of the trust in jeopardy.
  • If the trustee proves unwilling or unable to properly administer the trust, the court may remove him or her. For instance, if he or she consistently makes bad decisions regarding investments, it could point to a failure to properly administer the trust.
  • If the trustee seriously breaches the trust, the court may remove him or her. A “serious” breach can occur through several small yet significant acts or could be one substantial failure that causes harm.

It will be necessary for your beneficiaries to prove the trustee has behaved in a manner that causes harm. A trustee may use the assets of the trust for his or her personal gain, mishandle funds, fail to provide documentation to the beneficiaries and more.

You cannot predict exactly how the trustee you choose will behave when the time comes. Beneficiaries who end up in this position could take their concerns to the court, especially if the trust does not include a removal process and the circumstances under which to use it. You could make sure your trust includes this type of provision to provide further protections to your beneficiaries and the trustee.