Red Flags That Your Trustee May Not Have Your Best Interests at Heart

When your loved one named the trustee for your trust, they believed that the individual would manage and distribute the funds according to their final wishes, as detailed in their trust documents. Not only is this the moral and ethical action to take, but it is also legally required. According to the Florida Trust Code, a trustee must agree to uphold several principles when managing a trust, including:

• Exhibiting a duty of loyalty to administer the trust in a manner that is “solely in the interests of the beneficiaries”
• Acting with impartiality towards all trust beneficiaries
• Investing the trust funds using “reasonable care, skill, and caution”
• Incurring only reasonable expenses for trust administration
• Accurately representing any special skills, they possess for trust administration
• Keeping clear records of all transactions and trust administration[1]

While most trustees manage their trusts to the best of their abilities, some abuse their position of power. Here are some of the red flags that may indicate your trustee is mismanaging your trust:

Lack of Communication

Your trustee should update you about the trust expenses, assets and distributions at regular intervals. If you have questions about the trust or its administration, the trustee should respond promptly. If the trustee “forgets” or refuses to provide updates or reply to your questions, that is a sign that something may not be right.

Unexpected Changes or Transfers in Trust Assets

If you find that the value of the trust has declined more than you would expect or more than is easily explainable, that could indicate the trustee is taking higher withdrawals from the trust than is allowed for their compensation.

Self-Dealing

Examples of self-dealing include the trustee taking personal loans from the trust, buying assets at below-market prices from the trust, or using trust funds to pay for personal expenses.

Conflict of Interest

A trustee needs to avoid conflicts of interest and the appearance of conflicts of interest. A common conflict of interest is a trustee hiring their own company to work for the trust. For example, if the trustee owns a contracting company and hires their own company to renovate the property owned by the trust, that is a conflict of interest.

If you suspect that your trustee is not fulfilling their legal obligations, you need to act fast to protect your assets. Huth, Pratt & Milhauser has successfully guided families throughout South Florida through the legal maze of removing and replacing corrupt trustees and recovering illegally squandered trust assets. Contact us right away for a free initial consultation to evaluate your case.

[1] Ch. 736, Fla. Stat. (2021).