How Can Individuals Protect Their Interests in Trust Litigation Disputes That Center Around Trustee Misconduct?

Trust Administration

Under Michigan law, beneficiaries of trusts are entitled to certain rights that protect them and their interests. A trustee is responsible for managing and distributing the assets in the trust. Additionally, the trustee owes beneficiaries what is known as a “fiduciary duty,” meaning they are legally obligated to discharge their duties in adherence with the law.

However, in some instances, beneficiaries of the trust feel that the trustee is guilty of some form of misconduct in distributing or managing assets, known as a “breach of fiduciary duty.” When a breach of fiduciary duty occurs, then beneficiaries of the trust typically have to resort to legal action to protect their interests.

If you are the beneficiary of a trust being mismanaged by the trustee, you must hire an experienced lawyer who can assist you in protecting your interests. In many cases, trustee misconduct can result in beneficiaries losing their rightful financial resources and assets.

What Are the Duties of a Trustee?

Under the Michigan trust code, trustees are expected to administer the trust in good faith, expeditiously, and in accordance with the law and the terms outlined by the grantor to benefit the beneficiaries.

The trustee is also legally obligated to control and protect all of the property and assets contained within the trust. Some of the rules that a trustee must follow by law include:

  • Keep accurate records regarding the administration of the trust.
  • Keep all trust property separate from their own.
  • Take all reasonable steps to locate trust property.
  • Ensure that all property is distributed to the appropriate beneficiaries promptly.
  • Respond to all tax matters that affect the trust.
  • Follow proper legal procedures for terminating the trust once all property has been distributed.

In addition, if a trustee has been appointed to their position based on special skills or proficiency, they have a duty to use their abilities to benefit the trust.

However, if the trustee does not adhere to the rules stipulated in the Michigan trust code, beneficiaries have the right to take legal action against them.

Can a Trustee be Forcibly Removed?

Under specific circumstances, the court may remove a trustee if they are found to not comply with the Michigan trust code. Furthermore, in many instances, the trust may include terms that dictate when a trustee should be removed.

Some common reasons for having a trustee forcibly removed include:

  • Failing to administer the trust effectively.
  • Failing to cooperate with a co-trustee which results in issues administering the trust.
  • The trustee has committed a serious error that affects the property held in the trust.
  • The trustee has misappropriated funds for their own personal use.
  • Self-dealing on the part of the trustee, where they use their position to serve their own interests above those of the beneficiaries.

Finally, the court may also opt to remove the trustee if it is determined that doing so better serves the interests of the beneficiaries. However, in cases where a court looks to forcibly remove a trustee, it also must determine whether there is an acceptable co-trustee or successor trustee who can assume responsibility for managing the trust.

What Rights Do Trust Beneficiaries Have in Michigan?

One of the key roles that a trustee plays in administering a trust is to keep all beneficiaries properly informed of issues regarding the trust. The most fundamental information a trustee must provide to beneficiaries should include how much the trust is worth and what assets may be entering or leaving the trust.

Some of the other rights trust beneficiaries have under Michigan law include:

  • The right to a copy of the trust document.
  • The right to an accurate accounting of the trust.
  • The right to challenge any accounting of the trust.
  • A right to receive distributions that adhere to the terms of the trust.
  • To be treated impartially by the trustee(s).
  • The right to petition the court to have the trustee suspended or forcibly removed.

Nevertheless, even though Michigan law grants trust beneficiaries specific rights, these individuals are not authorized to actively engage in a trustee’s day-to-day decisions. For example, a trustee may be authorized to sell property but does not necessarily need approval from beneficiaries unless dictated by the terms of the trust.

Why is it Important to Hire a Lawyer to Protect My Interests in a Trust Dispute?

Individuals involved in trust litigation issues are often anxious and uncertain about the outcome and whether they can still access property intended for them. However, with the help of a skilled trust litigation lawyer, beneficiaries can feel more secure knowing they have a legal ally who will help maneuver through the complex litigation process.

If you are a trust beneficiary involved in trust litigation, it is also essential that you know and understand your rights. Failure to understand what legal steps you can take to protect your interests could result in you losing access to vital financial resources and other assets that are rightfully yours.

For these reasons, our law firm is passionately committed to helping trust beneficiaries understand and maintain their rights. If you have reason to believe that a trustee is guilty of misconduct, you have a right to ask the court to remove them. However, it must be demonstrated that the trustee breached their fiduciary duty as required by state law.

In some instances, a Michigan court may order that a trustee who has been found to have committed misconduct pay damages to the trust beneficiaries. However, it should also be noted that trust litigation law is overly complex and challenging to try and navigate independently.

If you have questions or need legal representation in a trust litigation dispute, contact Estate Planning & Elder Law Services, P.C. of Northville, MI, at 888-663-7407 to schedule a free no-obligation consultation.

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