Administering a trust is a major responsibility. Whether the party in this role is an individual or an institution, it is crucial that they perform their duties lawfully and in accordance with the settlor’s wishes. Failure to do this can have devastating consequences, including a contentious legal battle and removal of the trustee.
This is the situation playing out in another state in light of allegations that a trustee mismanaged a trust. And not only has the case led to legal challenges, it has also resulted in losses for charities that were slated to receive sizable gifts from one man’s trust.
What was supposed to happen
According to reports, the case began with the passing of a man who worked during his lifetime to save $3 million. He lived frugally, never had children and lost his wife weeks before he also passed away.
He established a trust to distribute his $3 million to four different charities; each was to receive about $750,000.
What went wrong
The decedent’s financial adviser administered the trust, as his asset management company was named as the trustee.
However, allegations state that the adviser purposefully delayed payouts to collect more fees from the trust. He also failed to properly inform one charity of who the man was who had generously given money. The decedent had not made the gift anonymous, yet the adviser withheld the man’s identity. The adviser also allegedly refused to give clear, direct and accurate answers when questioned about the amount of the trust and the fees.
Claims also allege that the adviser failed to notify beneficiaries properly and in a timely manner. In fact, only one of the charities knew about the trust six months after the man’s death, and it had to reach out to the adviser for more information.
The fallout
Ultimately, the charities each received about $675,000 after a new trustee was appointed. However, the legal battles continue over who should pay legal fees associated with this case. A judge ordered the adviser to pay the charities’ legal fees, but he has appealed that decision.
This case can serve as an example to people here in Tennessee about the high cost of trust mismanagement, and the importance of seeking legal guidance when dealing with matters related to trust administration.