Trustee… misappropriation of funds?
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Trustee… misappropriation of funds?
My older brother is trustee on two trust funds our father set up for our two other
brothers, according to his will. We sold our deceased parent’s home 2 weeks
ago, and my brother, the trustee, is now claiming we all owe him hundreds of
hours of labor he spent at the house doing work prior to the sale, adding up to
several thousand dollars. First, there is no provision in the will that he receive any
of extra compensation, nor did we as siblings have any prior agreement for
anything such as this. My question is, is he within his legal right as a trustee to
just pay himself out of their funds because he feels it is owed to him? They each
have a spendthrift clause in their trusts. This is in the state of Pennsylvania.
Asked on May 29, 2016 under Estate Planning, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
No, a trustee is *only* entitled to the compenstation which the trust instrument allows him to get--he has no legal authority to pay himself more from the trust than the terms of the trust allow. If he chose to put his own time and labor into trust property, that was his choice: he is not allowed to unilaterally do that and pay himself for it, and paying himself more than the trust allows is a violation of his authority under the trust and of his fidcuciary duty as trustee to the trust beneficiaries. If you believe that he is taking more money out of the trust than allowed under the terms of the trust, you can bring a legal action in chancery or surrogates court forcing him to "account" for his actions and spending--and to return excess funds. Ideally, you'd have an attorney do this for you, but if not economically worthwhile--e.g. if the attorney's cost could eat up the money you're trying to recover--trust beneficiaries would have the right to bring the legal action themselves, on their own behalf. You should be able to get some instructions and possibly sample forms from the court.
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