The death of a loved one combines emotionally-charged issues with necessary legal steps. While dealing with a tragedy, the gathering of assets, paying debts, and the filing of tax returns are necessary and important parts of moving forward. An initial and significant step is selecting a personal representative or trustee to take on the responsibility of distributing the assets.
Maintaining open lines of communication and providing timely updates to beneficiaries is important to avoid misunderstandings or formal complaints. This important role places a great deal of power in the hands of the individual. While most are trustworthy, countless cases exist of personal representatives and trustees abusing their authority.
Breaches of Duty Can Take Many Forms
Mismanaging a trust or estate represents a serious breach of duty. While some breaches are due to missteps, personal representatives sometimes take advantage of their powerful authority and act in their own best interests, violating their position of trust.
- Not abiding by the directives of a will or trust
- Negligence or recklessness in managing estate or trust assets
- Fraudulently hiding, misappropriating, or failing to account for assets
- Failing to pay taxes or file returns on time
- Failing to communicate/miscommunication with heirs and creditors
- Favoring one beneficiary over the others
- Failing to renew property or casualty insurance
Personal representatives who act unethically can be removed, be made to pay financial penalties, and/or sued by the heirs or beneficiaries in court.
The discovery of mismanagement or deliberate, unethical acts requires quick action before any more damage to an estate and its beneficiaries can be done. Legal issues become more difficult when a family member is engaged in these activities. While they can be held responsible, the fallout can permanently destroy relationships with loved ones.