In a previous post, I wrote about qualities a successor trustee should have to ensure a successful trust administration. While it should go without saying, there will be problems when a successor trustee tries to administer a trust estate if they lack knowledge and experience in dealing with legal, accounting, and tax issues. The successor trustee compounds those problems by refusing to hire experts like attorneys and accountants to assist the trustee in administering the trust estate properly.
An uninformed successor trustee often fails to complete time sensitive tasks in a timely manner. They fail to keep beneficiaries informed of the progress of the trust administration. Sometimes, an uninformed successor trustee will fail to do even the most basic tasks, like providing copies of the trust to all beneficiaries and qualified heirs at law. Often, uninformed trustees fail to keep adequate financial records. Each and every one of these mistakes is a breach of the trustee’s various fiduciary duties to the beneficiaries.
A single breach of fiduciary duty is sufficient for beneficiaries to have a successor trustee removed. Unfortunately, an uninformed trustee often commits several breaches of their fiduciary duties, and often these breaches cause financial harm to the beneficiaries. When a successor trustee’s breach of their fiduciary duties causes financial harm to beneficiaries, the trustee is personally liable to the beneficiaries for those financial losses.
If you are named as a successor trustee, keep two things in mind: (1) not only are you allowed to hire experts like attorneys and accountants to assist you, the law requires you to do so for any areas where you are inexperienced or lack knowledge; and (2) if you believe the job of administering a trust estate is not for you, then you don’t have to serve as successor trustee — you can decline to serve, and another successor can serve instead. Even if the trust instrument does not name another successor after you, the law provides mechanisms to appoint successors when necessary.
If you are a beneficiary of an irrevocable trust, and you suspect that the successor trustee may be failing in their duties, then you should consider getting independent legal advice, before an uninformed successor trustee can do real financial damage to the trust estate.