Requesting executor's resignation

[ksajb]

What is the name of your state? Michigan

My father died in '00 and my mother died in '02. Our oldest brother is executor of their Trust and my two siblings and I had to request mediation with the Trust's atty for the disbursement of funds. When we requested mediation as stipulated in the Trust, we also requested a complete summary of the accounts in addition to a real estate accounting. That request was never fulfilled. At the time of my mother's death, 2 siblings wanted out of their share of the real estate, and 2 chose to keep it.

Well, it has been 4 years and there has been no attemtp to provide us each with a deed to our share of the property, neither has there been any attempt to buy us out or to provide a solution to our requests to relieve us of the property. The two of us that want out are being forced to pay for repairs and maintenance through funds that were set aside from a portion of the original disbursement of the estate to cover operating and maintenance expenses. We've recently discovered that the property taxes are delinquent, phone and power bills are not being paid, etc. Our brother will not answer our phone calls or e-mails so naturally we're wondering what could possibly be happening. Our intention is to request that my brother resign as executor immediately before we lose everything.

My questions are:

1. Since we went through mediation the first time to disburse the funds and request an accounting, do we have to do so again in order to settle the real estate which is also a part of the Trust?

2. Can a lawyer who is not affiliated with the Trust request the resignation of the executor directly, or will he have to make the request through the Trust's atty?

3. Can the two siblings who wanted out of the property 4 years ago expect/request repayment for the expenses on something they never wanted in the first place?

Thank you in advance!

 

[Dandy Don]

A resignation can not be done simply by request. You need to be consulting with a local trust attorney to find out how and whether you have enough evidence to bring breach of fiduciary duty charges against this trustee and then he can be replaced. Also need to find out if this trustee (NOT called executor when there is a trust, executor only applies to the will) has posted an executor's bond or whether state law or the trust exempted that requirement.

Are there enough assets in the trust or the will to be able to afford paying these overdue property taxes, etc.?

 

[ksajb]

Thank you, Don. Yes, there was a significant amount of money witheld to take care of the bills and maintenance - probably enough for the rest of our lifetime. The Trustee and the rest of us had agreed to a much smaller feasible amount but my brother decided to keep 70% more of our assets for the fund. Essentially, two of the siblings are having to pay from their funds for property that they haven't wanted since my mom died. Taxes on the property are heading toward the delinquent stage in 3 months. We also own another piece of property which will have to go through probate - a process that hasn't even been started. Who knows if that property is lost to us already.

If we're faced with the worst case scenario of losing all of the real estate, would we ever be able to hold my brother liable?

Don, what is an executor's bond?

 

[ksajb]

Well, there is more to this saga. I just found out that the insurance has lapsed on both pieces of property that are in the estate because it hasn't been paid in over a year. If my brother voluntarily resigns as requested, one of the siblings has already decided that she wants a mutual trust atty appointed instead of the 2nd Trustee as named. She's worried about the possibility of dissention among the ranks. My feeling is that she's worried she'll be ripped off somehow, in all honesty. I can't blame her because we've all been burned for nearly four years.

So, my priority list differs from hers. BTW, I am second Trustee. My top priority is to get the control from my brother, pay the impending obligations before we lose over $300,000 worth of property, in addition to the maintenance funds and the property that will have to go through probate, meet with all the siblings (including ex-Trustee), and pour over all the documents, then decide as a group if we need to hand it over to a third indifferent party.

The trust lawyers are saying we should sue but don't know if they can represent us due to conflict of interest. If he refuses to resign, should we just hire a lawyer that is not affiliated with the trust and proceed? How costly could that potentially be?

 

[tranquility]

It is difficult to understand what is happening because of your use of terms haphazardly. But as to your question, it does seem like there may be a breach of fiduciary duty. You can always ask for the trustee to resign. If he does not, you can sue to remove the trustee. (I hope you are not truly a 2nd trustee as you wrote--perhaps a successor trustee?) This will be expensive if it is fought by the trust. You will pay for your attorney up front and during and the trust will use trust funds to defend itself. If there was a breach of fiduciary duty, the trustee may have to pay damages including the cost of the attorneys.

There are rules to changing the terms of a trust, including who the new trustee will be.

We had a case here where we did tax work for a trust where the trustee's sister thought she was not being treated fairly. (I'd have to agree.) While the trustee was finally changed by agreement, the sister was out over $12,000 and the trust over $8,000 in attorney's fees before anything was settled. They never went to court. Plan your budget accordingly.

I'll let you know how this year's Thanksgiving dinner goes at their house.

 

[Dandy Don]

What specific reason is brother giving for not paying the taxes?

Is there a way you all could come up with the money for the taxes without using trust money?

You need to be consulting with a few local trust attorneys to figure out your best options (or post to lawguru.com--another free advice website)--is there a way you could petition the courts to get the taxes paid off by making an emergency request for funds from the trustee?

While a breach of duty lawsuit is necessary, it may take more than a few months and will that delay hurt your situation by making it worse?