Trustee Problems

What is the name of your state? Texas

So to make a long story short my father and I are now on very limited speaking terms (e-mails letting him know how much my tuition will be and when it is due and him not replying but still paying). I have reached the point that this about the only communication I wish to have with him as long as he continues to pay his part for my education. My only worry is that he will stop paying it and so my problem arises.

My grandparents set up a trust for my sister and any future children of my parents (me) before I was born, between 1980 and 1983 from what I have been able to find out so far, and put around $30-40,000 in it. My parents divorced in 1993 and at that time my mother had an accounting of the trust included in the divorce decree, she had contributed several thousand dollars to the trust when her father died and after spending more than what she had put into the trust to try and get it out she settled for an accounting of the trust in an official document. My father is the sole trustee of said trust and at the time of the accounting provided in the divorce decree there were $16,839.43 in Cash and Securities and a $25,650.00 note written to my father. In addition to the divorce decree I was able to obtain copies of two trusts done for my other cousins around the same time that the trust for my sister and I was written. They are almost identical to each other so I assume, though I cannot be sure, that our trust is similar to them with the exception that they had family friends, an accountant and a lawyer, name as trustees and ours has our father.

When my father and I first had a fight and he completely stopped paying for my education I e-mailed him asking for money from the trust since he would not pay and told him if need be I could send him a certified letter saying the same. He replied saying that:

"As the Trustee of the ***** - ***** Trust #2 (not cursing just blanked out the name of the trust) dated 2/10/80 I advise you that the entire corpus of the trust has been distributed several years ago in accordance with the terms and conditions of said trust agreement.

As you Father I suggest you change your tact and attitude."

The first thing that confused me about this is that the trust named in the divorce decree had a similar, though not exact, name. As in he referred to the trust as "Company Name 1- Company Name 2 Trust # 2" and the one in the decree is referred to as "My Grandfathers initials - Company Name 2 Trust # 2"

So my first question is would the difference in name make any difference? My father is known to be very tricky and shady (the reason my parents divorced is that my mother spent well over $250,000 helping him fight money laundering and tax evasion charges) so I would not put it beyond him to name another trust which is empty (I know he has one in his name) to claim that it empty because I did not specifically ask for my trust. He does not know that I know as much as I do about my trust and I do not want him to be aware of it so that I have at least one card in my hand should anything happen.

The second question on the same subject is that the date listed is before my sister was born, before she was even concieved, and 2 years before the other trusts were written. Would this add to the possiblity that he may be lieing about the specific trust?

Furthermore I actually seriously doubt that there is much left in the trust, though it is a possibility that he spent all of the money, mainly due the fact that he is terrible with money. My sister recieved a little money, possibly from the trust, to help her go to college. Somewhere in the area of $5,000 or so. The divorce decree says that child support could not be paid from the trust so I know it did not go towards that. Is there any way I can obtain the actual trust document or demand an accounting? And if he did manage to blow the money, I know atleast $25,000 was blown due to the $25,000 not made out to him that was most likely never repaid, is there any way that I can go about recovering some of that money, hopefully with interest?

He is well off, makes around $200,000 a year and owns one $350,000 piece of real estate in addition to his $250,000+ house, and would be able to pay should I win. He is known to hide his money very well, his commerical real estate is owned by a company he is the sole owner of and his paycheck is made out to the same company so that he can get a better tax rate, so I am sure that going about getting the money if I won could be more difficult than it should be.

I have around $10,000 of my money from my maternal grandmother that I could use to fight this in addition to any help my mother could provide. Should he cut me off would this be something worth pursuing or is it tossing good money down the drain attempting to get more?

Though I posted quite I bit here I know more information will most likely be needed so just ask for what you need and I will reply as soon as possible though the only information I have at my disposal at the moment is the trust documents from my cousins, the divorce decree, pretty much hateful e-mails form him, and what I have learned from my mother and over the years about the trust.

Thanks ahead of time,

J

So I did a little more research and found this regarding asking for an accounting of the trust:

§ 113.151. DEMAND FOR ACCOUNTING. (a) A beneficiary by
written demand may request the trustee to deliver to each
beneficiary of the trust a written statement of accounts covering
all transactions since the last accounting or since the creation of
the trust, whichever is later. If the trustee fails or refuses to
deliver the statement on or before the 90th day after the date the
trustee receives the demand or after a longer period ordered by a
court, any beneficiary of the trust may file suit to compel the
trustee to deliver the statement to all beneficiaries of the trust.
The court may require the trustee to deliver a written statement of
account to all beneficiaries on finding that the nature of the
beneficiary's interest in the trust or the effect of the
administration of the trust on the beneficiary's interest is
sufficient to require an accounting by the trustee. However, the
trustee is not obligated or required to account to the
beneficiaries of a trust more frequently than once every 12 months
unless a more frequent accounting is required by the court. If a
beneficiary is successful in the suit to compel a statement under
this section, the court may, in its discretion, award all or part of
the costs of court and all of the suing beneficiary's reasonable and
necessary attorney's fees and costs against the trustee in the
trustee's individual capacity or in the trustee's capacity as
trustee.
(b) An interested person may file suit to compel the trustee
to account to the interested person. The court may require the
trustee to deliver a written statement of account to the interested
person on finding that the nature of the interest in the trust of,
the claim against the trust by, or the effect of the administration
of the trust on the interested person is sufficient to require an
accounting by the trustee.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 550, § 3, eff.
Sept. 1, 2003.

Any advise on how to word the request or would this be something I should obtain legal council to do?

Another find:

§ 113.060. INFORMING BENEFICIARIES. The trustee shall
keep the beneficiaries of the trust reasonably informed concerning:
(1) the administration of the trust; and
(2) the material facts necessary for the beneficiaries
to protect the beneficiaries' interests.

Would this mean my sister or I should have been informed if the entire corpus of the trust had been distributed. About two years ago he very informally told me there was "about two thousand dollars left." This was all before my mother had showed me how much had been in there originally so I thought "wow, 2 extra grand for college" not "where is the other +/- $38,000"

And yet another:

§ 113.052. LOAN OF TRUST FUNDS TO TRUSTEE. (a) Except as
provided by Subsection (b) of this section, a trustee may not lend
trust funds to:
(1) the trustee or an affiliate;
(2) a director, officer, or employee of the trustee or
an affiliate;
(3) a relative of the trustee; or
(4) the trustee's employer, employee, partner, or
other business associate.
(b) This section does not prohibit:
(1) a loan by a trustee to a beneficiary of the trust
if the loan is expressly authorized or directed by the instrument or
transaction establishing the trust; or
(2) a deposit by a corporate trustee with itself under
Section 113.057 of this Act.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.

Does this mean he couldn't have made the loan to himself?

bumpin it up

Have you asked your sister whether she ever received any money from this trust?

What did the $25,650 note consist of--a promissory note from someone promising to pay back that amount because they had borrowed it from the trust? Who was the note from?

Look at the Texas Trust Law to see what information he is required to report to beneficiaries. Some states allow trust beneficiaries to ask for an accounting statement for each year the trust has been in existence by sending the trustee a certified letter requesting such information, and it's better if your have your attorney send that letter on your behalf since he would be more likely to respond officially if it came from an attorney, rather than just you, where he might ignore it. However, so much time has passed (you need to ask him exactly what year the corpus of the trust was distributed) that he may have thrown away the tax and accounting records for the trust.

The name difference may or may not be significant. You truly need to be consulting with a trust attorney to get your questions answered and to find out how to get access to the trust document and perhaps also state and federal income tax returns for the trust, with or without having to file a lawsuit.

When the trust was dissolved, he supposedly may have had an obligation to notify all beneficiaries about this and if he didn't he may be in breach of duty. Attorney may also be able to help you find out whether he posted a trustee's bond or whether the trust exempted him from this requirement. His actions and character are a bit suspicious and this needs to be investigated, but are you willing to risk not having a relationship with him at all if he gets offended that you are looking into this further? On the other hand, he has an ethical and moral obligation to account for everything properly to the beneficiaries and it looks like he hasn't done that.

Have you looked at your grandparents' probate file to see if there may be any clues in there about the existence of the trust?

DANDY DON IN OKLAHOMA ([email protected])

The $25k promisorry note was made out to my father. That is about the only thing I know he did incorrectly for sure because it was in my parents divorce document so I assume that it is basically like him admitting that he did it under oath.

Both of my grandparent's are still alive so there is no probate for them. Asking them would not be much help because they like to pretend as if nothing is wrong with the family. The trusts set up for the other grandchildren, my cousins, are all empty because their fathers used them to pay child support. But my mother, being the smart woman she is, made sure that my father could not use our trust to pay child support and it says as much in the divorce decree.

At this point I am pretty much done having any hope that we will reconcile and I am just trying to make sure I have a few cards in my hand should he choose to quit paying for my school.

If the trust was dissolved can he still held responsible for any impropirties he took while he was trustee or is it a dead issue since the trust no longer exists? That is if it no longer exist.

There are more than a few potential breaches of fiduciary duty here. You need to ask for an accounting according to the law. If one is not forthcoming, file a petition and demand one. Request attorney's fees in the demand.

There may not be much in the trust, depending on the expenses. So you have to be very reluctant to have a full-blown suit as the cost may eat up all the assets and you're never sure you're going to win. I don't know TX case law, but there would not be a statute of limitations problem in CA. The mere fact he answered in a letter "as trustee" indicates a trust with you as beneficiary is still in existence. If the asset is a note, the note better have a fair amount of interest attached.

Start with a demand for an accounting. Do a petition if one is not forthcoming and *demand* it through the courts in discovery. Be ready to go to work to support your own schooling.

So to request the accounting should I first send a certified letter on my own or find an attorney and have him write the letter? If he does the accounting and provides it to me after the first request could I still recieve attorney's fees? From what I have read of the other trust documents it seems as if any attorney's fees used to defend anything to do with the trust come out of the trust, would this still be the case if my action is against the trustee and not the trust itself?

So to request the accounting should I first send a certified letter on my own or find an attorney and have him write the letter? If he does the accounting and provides it to me after the first request could I still recieve attorney's fees?

Click to expand...

Probably not. The court must award fees and, at least in CA, they are reluctant to unless there is a clear breach of fiduciary duty. There is the problem of who will pay? As you wrote, the trustee would pay from the trust unless he was removed for the breach. You are either going to play this hard or not play at all.