When someone creates a trust, they place an enormous amount of confidence in the person chosen to manage it. A trustee has a legal duty to act in the best interests of the trust and its beneficiaries, not in their own interests. Unfortunately, trustees do not always fulfill those obligations. Whether due to negligence, conflicts of interest, or intentional misconduct, trustee abuse can place significant assets and inheritances at risk.
If you believe a trustee is mishandling a trust, it is important to understand your legal rights. Maryland law provides beneficiaries with options to hold trustees accountable, recover losses, and, in some cases, have the trustee removed. An experienced Maryland trust litigation attorney can help evaluate your situation and determine the best course of action.
What Is Trustee Misconduct?
Trustee misconduct occurs when a trustee fails to fulfill the fiduciary duties required by law or by the terms of the trust agreement. Trustees are legally obligated to manage trust assets prudently, act honestly, avoid conflicts of interest, and always put the interests of the beneficiaries first.
While honest mistakes can happen, repeated poor decisions or intentional wrongdoing may constitute a breach of fiduciary duty.
Common Signs of Trustee Misconduct
Beneficiaries are not always aware that something is wrong until significant damage has already occurred. Some of the most common warning signs include:
Lack of Communication
A trustee should keep beneficiaries reasonably informed about the administration of the trust. Warning signs include:
- Ignoring emails or phone calls
- Refusing to answer reasonable questions
- Providing vague or incomplete information
- Delaying updates for months or years
If you consistently receive little or no information, it may warrant further investigation.
Refusal to Provide an Accounting
One of a trustee’s most important responsibilities is maintaining accurate financial records.
If a trustee refuses to provide:
- Financial statements
- Investment records
- Receipts
- Income distributions
- Expense reports
they may be violating their fiduciary obligations. A Maryland trust litigation lawyer can often compel a trustee to provide a formal accounting.
Self-Dealing
Self-dealing occurs when a trustee uses trust assets for personal gain instead of for the benefit of the trust.
Examples include:
- Selling trust property to themselves or relatives
- Borrowing money from the trust
- Using trust funds for personal expenses
- Investing trust assets in businesses they own
Self-dealing is one of the most serious forms of trustee misconduct.
Unreasonable Delays
While administering an estate or trust takes time, unexplained delays can indicate problems.
Examples include:
- Failing to distribute assets after debts have been resolved
- Delaying required tax filings
- Allowing property to sit vacant without justification
- Ignoring court deadlines
Sometimes delays result from legitimate legal issues, but beneficiaries deserve clear explanations.
Poor Financial Management
Trustees have a duty to preserve and protect trust assets.
Mismanagement may include:
- Risky investments
- Failure to insure property
- Allowing real estate to deteriorate
- Missing tax payments
- Poor recordkeeping
Even if there is no intentional fraud, negligent management can create substantial financial losses.
What Are a Trustee’s Fiduciary Duties in Maryland?
Under Maryland law, trustees owe beneficiaries several fiduciary duties, including the duty to:
- Act in good faith
- Follow the terms of the trust
- Act impartially among beneficiaries
- Protect trust assets
- Avoid conflicts of interest
- Keep accurate records
- Provide information when required
- Invest assets prudently
Failure to meet these obligations may constitute a breach of fiduciary duty.
What Can Beneficiaries Do?
If you suspect trustee misconduct, avoid jumping to conclusions before gathering information. The first step is often requesting documentation, including trust accountings, bank records, investment statements, property appraisals, and more. Many disputes can be resolved once accurate information becomes available. However, if concerns remain, legal action may become necessary.
Legal Options Available in Maryland
A Maryland estate litigation attorney can help beneficiaries pursue several legal remedies.
Request a Formal Accounting
If financial records are incomplete or unavailable, beneficiaries may petition the court to require the trustee to produce a complete accounting of trust activity.
Seek Removal of the Trustee
Maryland courts may remove a trustee who:
- Breaches fiduciary duties
- Becomes incapable of serving
- Mismanages trust assets
- Creates conflicts of interest
- Acts dishonestly
- Fails to administer the trust properly
If removed, the court may appoint a successor trustee.
Recover Financial Losses
If misconduct causes financial harm, beneficiaries may seek compensation for losses suffered by the trust. Potential damages may include lost investment value, improper distributions, unauthorized withdrawals, property losses, interest, and attorney’s fees in certain circumstances.
Obtain Court Supervision
In some cases, beneficiaries ask the court to supervise ongoing trust administration to ensure future compliance.
Trustee Misconduct Often Creates Family Conflict
Many trustee disputes involve siblings, adult children, or other close family members. Emotions often run high because beneficiaries may feel excluded, mistreated, misled, financially harmed, betrayed by someone they trusted. Unfortunately, waiting too long can make recovering assets more difficult. Working with an experienced Maryland trust attorney early may help preserve both evidence and legal options.
How Trustee Disputes Can Overlap With Divorce
At Blackford Law, we understand that legal issues rarely occur in isolation. In some situations, trust disputes arise during or after divorce proceedings. Questions may involve inherited assets, marital property, trust income, or whether trust assets are subject to equitable distribution.
If you are dealing with both family law and estate matters, working with a law firm experienced in both Maryland divorce law and estate litigation can help ensure that all aspects of your case are considered together.
When Should You Contact a Maryland Trust Litigation Attorney?
You should consider speaking with an attorney if:
- The trustee refuses to communicate.
- You suspect trust funds are missing.
- You have been denied requested financial records.
- Trust assets appear to be losing value due to poor management.
- The trustee has a conflict of interest.
- You believe the trustee is benefiting personally from trust assets.
- Distributions have been delayed without explanation.
- You are considering contesting a trustee’s actions.
Early legal advice can often prevent problems from becoming significantly worse.
Blackford Law Can Help Protect Your Interests
If you believe a trustee has violated their fiduciary duties, you do not have to navigate the situation alone. The attorneys at Blackford Law represent beneficiaries, heirs, trustees, and families throughout Maryland in trust disputes, estate litigation, probate matters, and divorce cases. Whether you need answers, an accounting, or aggressive representation in court, we can help you understand your options and protect your rights.
Contact Blackford Law today to schedule a consultation with an experienced Maryland trust litigation attorney.
Frequently Asked Questions
Can a trustee be removed in Maryland?
Yes. A Maryland court may remove a trustee who breaches fiduciary duties, mismanages trust assets, has a conflict of interest, becomes incapable of serving, or otherwise fails to properly administer the trust.
Can beneficiaries sue a trustee?
Yes. Beneficiaries may bring legal action if they believe a trustee has breached fiduciary duties, caused financial harm to the trust, or failed to comply with Maryland law or the terms of the trust.
What is a breach of fiduciary duty?
A breach of fiduciary duty occurs when a trustee fails to act in the best interests of the beneficiaries, improperly manages trust assets, engages in self-dealing, or otherwise violates their legal obligations.
How do I prove trustee misconduct?
Evidence may include financial records, trust accountings, bank statements, emails, property records, witness testimony, and documentation showing improper management or misuse of trust assets. An experienced Maryland estate litigation attorney can help gather and evaluate the necessary evidence.
How long do trustee disputes take?
Every case is different. Some disputes are resolved through negotiation after records are produced, while others require litigation and may take several months or longer depending on the complexity of the trust and the issues involved.
