untrusty Trustee??

[djsmith81]

What is the name of your state (only U.S. law)? Georgia

My Sister-in-law is having issues with a court appointed trustee assigned to her son. My nephew was awarded a lump sum settlement from a Dr. Office after an employee/student assaulted him. The money was put in my nephew's name and can't be touched until he turns 18. I think maybe a few details are missing, but she seems to think that he is charging too much. $4000/yr and he may also be investing (and losing) some of the money. Who does she need to talk to about this? What should her first step be?





-DJ-

 

[tranquility]

What is the name of your state (only U.S. law)? Georgia

My Sister-in-law is having issues with a court appointed trustee assigned to her son. My nephew was awarded a lump sum settlement from a Dr. Office after an employee/student assaulted him. The money was put in my nephew's name and can't be touched until he turns 18. I think maybe a few details are missing, but she seems to think that he is charging too much. $4000/yr and he may also be investing (and losing) some of the money. Who does she need to talk to about this? What should her first step be?

If the lump sum was about a quarter million, that amount is reasonable under Georgia statute. ( http://law.justia.com/codes/georgia/2010/title-53/chapter-12/article-11/part-2/53-12-210/ ) As to who to talk to, a lawyer is best. Only he can look at the facts and determine there is a fiduciary breach and an ability to remove the trustee.

 

[djsmith81]

Thanks

I'm fairly sure its just over half a million. So, it sounds like she may have no need to worry. Thank you for the information

 

[LdiJ]

I'm fairly sure its just over half a million. So, it sounds like she may have no need to worry. Thank you for the information

Not with the fees, but she might need to worry if the trustee is truly making bad investments.

 

[TrustUser]

i have just never liked the fee aspect of trusts, the way it is currently done.

managing a trust is just a business, and i think it would be best if it were run that way.

the beneficiary hire/fire a trustee when desired, and fees agreed upon between both parties.

some investments are much more time consuming than others, and some take a lot more knowledge than others.

it takes almost zero effort to open up a cd, whereas overseeing a real estate rental requires time and knowledge, even if one hires out a property manager specialist.

we would not operate this way in any other aspect of our lives.

 

[LdiJ]

i have just never liked the fee aspect of trusts, the way it is currently done.

managing a trust is just a business, and i think it would be best if it were run that way.

the beneficiary hire/fire a trustee when desired, and fees agreed upon between both parties.

some investments are much more time consuming than others, and some take a lot more knowledge than others.

it takes almost zero effort to open up a cd, whereas overseeing a real estate rental requires time and knowledge, even if one hires out a property manager specialist.

we would not operate this way in any other aspect of our lives.

If the beneficiary could hire/fire a trustee at will, it would defeat the entire purpose of a trust. That is why one needs a court order to remove one trustee and appoint another.

 

[tranquility]

If the beneficiary can hire and fire the trustee at will, then the beneficiary has full powers over the trust. It would be like the trust is not there. That's why some have come up with the "protector" theory. The trust appoints a trustee and a protector. One of the protector's usual jobs is that he can fire the trustee. The beneficiary can fire the protector. Of course, things get complex very fast and the results are extremely state specific, but the main purpose is to prevent merger if the trustee can be fired at the whim of the beneficiary.

 

[TrustUser]

the beneficiary would not have full power of the trust, by simply giving them the right to hire and fire the trustee.

the trustee is still legally bound to uphold the instructions of the trust.

i simply do not like giving the trustee the main power.

in my mind, he should consult with the beneficiary, regarding investments, etc.

the trust is owned by the beneficiary, in the sense that he is the one that derives the benefit from it.

i realize that this is my opinion, and not the law.

 

[tranquility]

the beneficiary would not have full power of the trust, by simply giving them the right to hire and fire the trustee.

the trustee is still legally bound to uphold the instructions of the trust.

i simply do not like giving the trustee the main power.

in my mind, he should consult with the beneficiary, regarding investments, etc.

the trust is owned by the beneficiary, in the sense that he is the one that derives the benefit from it.

i realize that this is my opinion, and not the law.

We have discussed this before. There is ample case law that shows unfettered right to terminate trustee gives beneficiary unfettered rights. The OP must focus on the last sentence.

For easy proof, Google trust protector.

 

[TrustUser]

we have indeed discussed this before. and i provided ample evidence to back up my statement.

a trust is a document written by a trustor. said document spells out the desires of that trustor.

a trustee's sole job is to follow those instructions of the trust.

and no matter how often one is changed, the job of the trustee remains the same.

the trust is just as valid as it ever was, irregardless of how the trustee is changed.

so i will once again respectfully disagree with you on this point.

if you want to supply a url that backs up your statement, i will once again look for a url to counter that.

i do not accept a statement simply that there is ample court evidence. you need to prove that point, just as you would need to do, if you were in court.

 

[tranquility]

we have indeed discussed this before. and i provided ample evidence to back up my statement.

a trust is a document written by a trustor. said document spells out the desires of that trustor.

a trustee's sole job is to follow those instructions of the trust.

and no matter how often one is changed, the job of the trustee remains the same.

the trust is just as valid as it ever was, irregardless of how the trustee is changed.

so i will once again respectfully disagree with you on this point.

if you want to supply a url that backs up your statement, i will once again look for a url to counter that.

i do not accept a statement simply that there is ample court evidence. you need to prove that point, just as you would need to do, if you were in court.

Here you will find a paper showing the opposite side of the issue where the settelor has the unfettered right. Note the reason why the court found such did not change an irrevocable trust into a revocable one.

 

[TrustUser]

btw, here is a sample trust that outlines the process TO REMOVE A TRUSTEE.

http://livingtrustnetwork.com/estate-planning-center/revocable-living-trust/sample-revocable-living-trusts/simple-trust-agreement-1.html

ARTICLE 9 SECTION B clearly states that the beneficiaries have such power.

the reason that a separate person named as a trust protector was started is because of large off-shore trusts.

i have always believed in the concept of a trust protector, which is why i have specific language in my trust for removal and appointment.

and like the trust above, i give the beneficiaries the power to remove the trustee. and no matter who is trustee, they are LEGALLY OBLIGATED to follow the instructions that i, as trustor, have placed in my trust.

PERFECTLY LEGAL AND ACCEPTABLE IN EVERY WAY !!!!

it is fine if the trustor CHOOSES to have a separate person called a trust protector. it is not mandatory to have said trust protector be someone other than the beneficiary. and if one does research on the net about said trust protector, the beneficiary almost always has the power to remove the trust protector.

i see little difference in that when compared to giving the power to remove the trustee directly to the beneficiary.

i am giving my beneficiary my assets. and i do not want to tie his hands in order to protect the assets that i have specifically given to him, to be managed in the way that i have specified in my trust.

and this attitude or desire would be EXTREMELY PREVALENT in the mind of any trustor.

 

[tranquility]

Oops, forgot to put the link.
https://www.google.com/url?sa=t&rct=j&q=georgia%20unfettered%20right%20replace%20trustee%20merger&source=web&cd=3&cad=rja&ved=0CDYQFjAC&url=http%3A%2F%2Fwww.law.northwestern.edu%2Flawreview%2Fv99%2Fn4%2F1723%2FLR99n4Houston.pdf&ei=ecSgUbzjOYOgiAKe84D4CQ&usg=AFQjCNFqob-DA87z4DcRtZubRv-X_ORe1Q&bvm=bv.47008514,d.cGE

 

[tranquility]

btw, here is a sample trust that outlines the process TO REMOVE A TRUSTEE.

http://livingtrustnetwork.com/estate-planning-center/revocable-living-trust/sample-revocable-living-trusts/simple-trust-agreement-1.html

ARTICLE 9 SECTION B clearly states that the beneficiaries have such power.

the reason that a separate person named as a trust protector was started is because of large off-shore trusts.

i have always believed in the concept of a trust protector, which is why i have specific language in my trust for removal and appointment.

and like the trust above, i give the beneficiaries the power to remove the trustee. and no matter who is trustee, they are LEGALLY OBLIGATED to follow the instructions that i, as trustor, have placed in my trust.

PERFECTLY LEGAL AND ACCEPTABLE IN EVERY WAY !!!!

it is fine if the trustor CHOOSES to have a separate person called a trust protector. it is not mandatory to have said trust protector be someone other than the beneficiary. and if one does research on the net about said trust protector, the beneficiary almost always has the power to remove the trust protector.

i see little difference in that when compared to giving the power to remove the trustee directly to the beneficiary.

i am giving my beneficiary my assets. and i do not want to tie his hands in order to protect the assets that i have specifically given to him, to be managed in the way that i have specified in my trust.

and this attitude or desire would be EXTREMELY PREVALENT in the mind of any trustor.

Legally obligated by who? See, that's the problem. The beneficiaries have standing to sue. If I am the one who can complain and I am the one who can replace, how can I not be considered to control the trust? When the legal and beneficial interests come together, then the trust is said to merge.

 

[TrustUser]

hi tq,

the link did not appear. but it may that i needed to be a member. it took me to one site, then redirected me to another site.

they do not merge, cuz the trustee is obligated BY LAW to uphold the instructions in the trust.

so as long as the trust itself does not allow the trustee/beneficiary to take control of the money, then there is separation.

what i learned quite a long time ago is that most anything one puts in a trust is legal, unless it is illegal. i know that sounds a bit funny, but what i mean is that the trust is enforceable as long as it is not allowing criminal or illegal activity.

i look at them as functions. just because the same person is both trustee and beneficiary, when he acts as trustee, he is obligated by law to follow the instructions of the trust.

from my research, the term trust protector is just a fancy name for one function of the trust - namely firing and possibly hiring the trustee. that function usually lies with the beneficiary, with most every trust that i have ever seen.

now i dont get involved with huge overseas trusts that may entail millions or billions of dollars. it is not illegal for the beneficiary to fire the trustee, but highly impractical. first, he is not geographically local. secondly, unless he is extremely business-like, he probably would have no idea as to whether the trustee was doing well or not. so you really need a highly-trained person to oversee the trustee functions. however, that does not preclude giving the beneficiary the ability to fire, just that he would need to hire an advisor to tell him what's what.

that's not unusual. even in typical living trusts that parents leave to their children (the kind i am most familiar with), advice is often hired - be it accountants, lawyers, etc. but the parents almost always make one of the children the trustee. they usually pick the one that has the best business sense.

from past conversations, i do think we deal with very different types of trusts, in terms of value. i see the mom and pop trusts, and am quite familiar with how they are actually used. as i said, one of the children is almost always the trustee.

i think you deal a lot with the mega-wealthy trusts. so i suspect that our opinions are different because we are like 2 of the blind men looking at different parts of the elephant, and coming up with very different conclusions.

in my trust, i make the trustee contact the beneficiary before he invests in anything other than banking accounts - cds, etc. i do not want him unilaterally investing in stuff without knowledge from the beneficiary.

i also limit what he can invest in. i do not let him invest at vegas, i mean the stock market. he can not invest in a business. if he invests in real estate, it must be in the united states. if he lends money on real estate, it can not be more than 70% ltv.

so the trustee is obligated to a very, VERY DIFFERENT set of circumstances than he would be, if it was his own money. this is what i mean by following the instructions of the trust. and a very obvious separation of his own assets and the trust assets.

the beneficiary has everything to lose, and i simply do not want to tie his hands. if he needs to get rid of a trustee, i want him to be able to do so IMMEDIATELY. and at least with my trust experience, we are usually talking about a group of siblings.

anyways, i know you have a lot of working knowledge and respect what you say, even if i dont always agree with it, like in this instance.