Living trusts are the preferred method for the efficient transfer of property to a beneficiary when the owner passes away. But like Caribbean cargo ships of the early 18th Century, the transfer of trust assets may encounter risks before reaching their destination. The most serious risk is that of the pirate trustee trying to steal the treasures of the estate. Often the trust raider attempts to hide the estate assets and the beneficiary is left adrift and in the dark.
While more people are executing living trusts, not everyone is doing so with the guidance of counsel or sufficient understanding of the duties of a trustee. We are seeing more cases of this type in Nevada. They involve the failure of the trustee to follow the terms of the trust agreement and comply with state law. Often, for a variety of insufficient reasons, a trustee refuses to make distributions to the beneficiaries as required by the trust. In more extreme situations the trustee steals from the trust.
Below is a bullet point list of some, but not all, Nevada statutory tools available to a beneficiary who suspects a trustee of mishandling or stealing trust assets.
- Demand an Accounting of Trust Assets: A “current beneficiary” can make a written demand for account. A “current beneficiary” is a person who is eligible to receive, or should be receiving, trust assets. An accounting can reveal to the beneficiary the form of assets, value of assets, where the money has come from, and where it’s gone. If the trustee refuses to provide the account, the beneficiary can petition the court for an order that the trustee provide the accounting.
- Demand a Copy of the Trust: Nevada law enables a current beneficiary, who is eligible to demand an account as described above, to demand a copy of the trust. If the trustee refuses to hand over the trust, the beneficiary can turn to the court for help. The court can order the trustee to provide a copy of the trust to the beneficiary, or specific portions of the trust that may affect the beneficiary’s rights.
- Removal of Trustee: A beneficiary can request that the court remove a trustee under a variety of reasons including breach of trust, unfitness, unwillingness or persistent failure to administer the trust. An uncooperative co-trustee can also be removed if they substantially impair the administration of the trust.
- Compel or Enjoin the Trustee: Nevada law also allows the court to make a variety of orders requiring the trustee to do, or not do, certain things. This may include making distributions to beneficiaries as required by the trust. The Court can also order that a trustee correct problems they have caused by their breach of trust.
The remedies briefly discussed above are some, but not all of the weapons available to a beneficiary when a trustee goes rogue. A beneficiary who believes the trustee has breached the trust agreement should consult an attorney. To fight back against the raider of the trust 1Source Law recommends sourcing legal counsel with experience in both the law of trusts and adversarial proceedings.
Attorney at Law
Trust Litigation and Disputes, Estate Planning Attorney Reno Nevada