Trustee abuse can occur in irrevocable Trusts. It is fairly easy to tell. For example, if you are entitled to receive money from a Trust for your health, educations, maintenance, and support, then you should be receiving something from the Trust. Everyone has some amount of maintenance and support requirements. Rent, car payments, health insurance premiums, utilities, and the like are all basic examples of support requirements.
Signs of Trustee Abuse
If you were to show us your Trust and then tell us the amount you have received from that Trust, we could tell you quickly whether you are an abused Trust beneficiary. Let’s say you have a Trust with total assets of $2 million. And over the last five years you have received a total of $25,000 from the Trust. That doesn’t sound adequate. Of course, much depends on the Trust terms and the distribution standard. But based on the typical Trust terms that you see in a majority of Trusts, $25,000 over five years is a ridiculously small amount from a $2 million Trust fund.
It’s common sense. And many people have a feeling they are being abused, they just don’t know for certain. Remember, Trust law requires Trustees to act reasonably. When you see something that appears to be unreasonable, it probably is a violation of the Trustee’s duties and responsibilities.
Now, if you have a Trust fund of $1 million and you have receive distributions of $350,000 over the last two years, then that may be an appropriate amount. In fact, it could be a generous amount depending on the underlying facts. But at least this distribution amount is not ridiculous on its face.
The smaller the amount you have received from your Trust, the more likely your Trustee is abusing you as a Trust beneficiary. This is especially true if the distributions have taken place over a long time—like several years. Time plus low dollar distributions equal abuse.
How to Fight Back
How do you stop that abuse? You start by asking for a reasonable amount. Put it in writing. Send an email, letter, or text. You don’t have to be nasty or mean, just make a civil request for a reasonable amount. If the Trustee refuses your request, then you must go to court on a Petition for Instructions where you will ask the judge to order the Trustee to make a proper distribution to you. Of course, you can also ask for things like Trustee removal and suspension. But that’s the subject of a different post.
The bottom line: don’t be a victim. If your Trustee is abusing your Trust fund, it is time to stand up and take action!