, The attorneys of Newman Williams PC ,

When can a beneficiary sue a trustee?

On Behalf of | Apr 10, 2023 | Estate Planning

When a Pennsylvania resident creates a trust, the party they choose to manage and distribute the trust assets has a great deal of responsibility. Trustees are fiduciaries because they are legally responsible for managing other people’s money. This means that they are required to act in the beneficiaries’ best interests at all times. Trustees are also expected to manage trust assets responsibly. When trustees fail to meet their fiduciary duties, act in ways that violate the terms of a trust or make decisions that do not benefit a trust, they can be sued.

When trustees cannot be sued

Trustees cannot be sued by individuals who are unhappy because they have not been named as trust beneficiaries no matter how aggrieved they feel. Trustees manage trusts, but they do not create them. Trustees are entitled to be paid for the work they do, and their compensation can be significant if their duties require them to manage large sums of money and make important investment decisions. Beneficiaries may feel that a trustee is being overpaid, but that does not provide the basis for a legal action unless the fees they receive are not in accordance with the terms of the trust.

When trustees can be sued

Trustees can be sued when they manage trust assets recklessly or breach their fiduciary duties. This kind of estate litigation is often initiated when trustees use trust funds to pay their personal expenses or distribute assets contrary to the terms of the trust or to beneficiaries who should not receive them. The burden of proof in these cases is on the beneficiaries, which means lawsuits filed against trustees are likely to be dismissed unless there is clear evidence of negligence or wrongdoing.

Avoiding probate litigation

Lawsuits against a trustee are often a sign of a poorly drafted trust. When the terms of a trust are vague or ambiguous, misunderstandings become almost inevitable. If the sums involved are significant, these misunderstandings can lead to anger, resentment and litigation. When trust creators make their wishes and the trustee’s responsibilities clear, beneficiaries will know where they stand and lawsuits may be avoided.



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