What are the consequences regarding a negligent trustee?

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What are the consequences regarding a negligent trustee?

My sister and brother are trusteed of my parents Crummy Trust. They have not been disclosing financial results annually as specificied in provisions of the trust and also have not been doing the filings to the IRS appropriately. This has been going on for several years, in fact for the past 24 years. Also, questions from the other 2 of 4 siblings in the Trust, have been ignored. Moreover, they have been told that it is none of their business. What can the beneficiaries do to get insight into the Trust performance and, if there has been negligence, what can be done to get the trustees removed from their position?

Asked on May 8, 2019 under Estate Planning, Washington

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

Trustees are fiduciaries: that is, they have a law-imposed "fiduciary duty" of loyalty to the beneficiaries, of not putting their own interests ahead of the interests of the beneficiaries (no "self dealing"), and of using reasonable care in managing the trust--as well as the duty to follow the terms of the trust itself. 
Beneficiaries who believe that trustees may be violating these duties can bring a type of legal action traditionally called an action "for an accounting" to, as the term implies, make the trustees "account for" their actions. In the course of the lawsuit, there are mechanisms (called "discovery") to make the trustees provide information about the trust and their actions. If the court finds that the trustees violated their duties, it can order them to or not do certain things, or even replace them as trustees.
This kind of legal action is significantly more complex than, say, a small claims case; you are strongly advised to retain an attorney to help you.


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