Tag Archives: breach of fiduciary duty

  • 30
    Sep 15
  • 2

How to Remove a Conservator

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How to Remove a ConservatorWhen someone is legally appointed to manage the finances of another person, that’s known as a “conservatorship.” This is a beneficial option for those who aren’t able to manage their own money due to health concerns, mental illness or old age. There are also conservatorships for children who receive money.

Unfortunately, some conservators mismanage funds (intentionally or unintentionally), compromising the financial wellbeing of people who aren’t able to tend to their own affairs. While it’s normal to become angry or frustrated in these situations, you should know that you have legal recourse to remove an ineffective conservator and seek a replacement.

A conservator has a legal duty to protect and conserve the protected person’s money and assets. If the conservator fails to fulfill these duties and responsibilities, he or she can be removed from the position.

The first step in the process is to gather evidence. You will need to prove that the conservator has failed to perform the required duties. Evidence might include bank statements or copies of checks that show the conservator has not been acting in the best interest of the protected person (known as a “ward”).

These statements can be compared against the annual accounting that the conservator is responsible for filing. If you need additional information in order to prove the conservator’s mismanagement of funds and assets, you can petition the court for a more detailed disclosure of financial dealings. Look for an experienced probate litigation attorney to assist you with this process.

Your attorney will help you file a notice of appearance and submit the documents that show the mismanagement of the protected person’s funds.

If you need to get documents from the conservator or another party (such as a bank or other involved person), your attorney can serve what is called a “subpoena duces tecum.” If you’re not able to get the necessary documents for evidence, you may need to work with the court to obtain them.

After you and your attorney have submitted the documentation, the court will rule on whether the conservator should be removed and, if so, will appoint a successor.

The courts, and the state and county governments, take very seriously the rights of vulnerable children and adults. The court accountant’s office closely monitors conservatorships. The court accountant, however, is merely reviewing annual accountings. If you or another family member discover before that review that money is being stolen or misused, you or the family member should take immediate action.

It’s important to act quickly in situations where money or assets are being stolen. Such quick action will increase the likelihood of recovering lost funds.

If you have questions about how to remove a conservator, please contact our office. We’d love to help.

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  • 11
    Sep 15
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Petition for Removal of Personal Representative

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Hey, this is attorney Paul Deloughery. I’ve been practicing probate litigation since 2007. One of the things I often get asked to do is to remove a Personal Representative (also known as the Executor) who is not performing his or her duties. Read more here.

How do you remove a Personal Representative who has already been appointed by the court? You hire a good probate litigation attorney. And that attorney follows A.R.S. Section 14-3611 regarding the removal of a Personal Representative. The attorney will also look at all of the various duties of a Personal Representative and make a list of various ways in which the PR has failed to live up to the required standards.

Here is a list of common failings by a Personal Representatives that can support removal of that person:
1. Failing to provide the heirs with an Inventory and Appraisement within 90 days of being appointed.
2. Failing to sell the house.
3. Failing to fairly distribute the personal property.
4. Failing to file tax returns or pay the taxes.
5. Using the estate money for his or her own personal use. (also referred to as “stealing”)

The nerve-racking part to this is needing to wait. If you didn’t get the Inventory exactly 90 days after the PR was appointed, you can’t file a Petition for Removal of Personal Representative the next day. The courts are fairly forgiving at first. Being two months to provide the Inventory will warrant a status conference with the judge. It won’t be enough to remove the PR yet.

However, there is a tipping point. If the Inventory is late, AND there is evidence that the Personal Representative is not treating the heirs fairly (as required by the Will or statute), AND there is some evidence that the PR is using the estate money personally, then that is probably enough to justify having the court appoint a successor PR.

The best thing to do is to talk to a probate litigation attorney. If you have any questions, give us a call at 602-443-4888. We will listen to your specific situation and tell you your options.

  • 02
    Sep 15
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Recovering from Trustee Misconduct

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Recovering from Trustee MisconductBeneficiaries of a trust depend greatly on the trustee to act in the best interest of the beneficiaries and the trust.

Unfortunately, trustees don’t always live up to the duty and responsibility of their position. Beyond creating headaches for family members and other beneficiaries, such misconduct can rob them of their inheritance.

In previous posts we covered the actions that can led to the removal of a trustee [link to post on what qualifies trustee for removal] and how to petition the court to remove the trustee and appoint a successor.

After those important steps, how do you go get back the stolen or misused money? It all depends on whether you are able to trace where the money was sent, if it was spent or if it still exists in some form. Let’s look at an example:

If a trustee used money from the trust to buy a new house, and if that house has not been sold or transferred to someone else, you can get a court order to freeze the property and eventually have it transferred back to the trust.

If the money is gone, there are three ways to recover funds:

  1. Surcharge. This applies if the trustee is also a beneficiary of the trust. In this situation, the former trustee’s inheritance from the estate can be reduced by the amount of any judgment the court passes against him or her. To have a surcharge ordered on a former trustee, you must file what’s known as a “Petition for Surcharge” with the probate court.
  2. Seize assets. If you’re able to trace the trustee’s spending to existing assets (cars, jewelry or other property), or if you’re able to show bank statements showing cash the trustee’s withdrawals from estate funds at ATM machines, the court can place a judgment against the trustee, making it more likely that you will get the money back. If the trustee has spent money on intangible purchases such as vacations, it will be much harder to get the money back.
  3. Personal refund. If the trustee has other personal assets (such as a house or bank accounts), the court can order the former trustee to turn over those assets to compensate for the value taken from the trust.

The process of getting the money returned can be lengthy. It can take from three to six months or more to settle a case recovering losses. The court process involves gathering evidence, and filing a petition with the probate court (this is all part of the steps necessary to remove a trustee).

After the court determines the amount of damages caused by the former trustee, the new trustee or other beneficiaries can then request the court to make further orders. To give an example, let’s say that a former trustee, Roger, owned a house, which used to be owned by the trust. After Roger has been removed from the position of trustee, the court can order that the house belong again to the trust. An attorney for the trust can then get a certified copy of the order and record the ownership of the property with the county recorder in the county where the property is located.

If you’re dealing with a trustee who is mishandling a trust, don’t wait to seek help. An experienced probate litigation attorney can walk you through the tricky and complicated petitioning process. It’s important to have someone knowledgeable on your side who knows the law and the court system.

Your attorney should work closely with you and the court to help you recover lost funds that are justly yours. The probate courts are there to help you and your family. Remember to act quickly and seek the assistance of an attorney. This will increase the likelihood that you will recover your inheritance.

Have any questions about recovering from trustee misconduct? Give us a call. We’d love to help.

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  • 26
    Aug 15
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How to Petition to Remove a Trustee

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How to Petition to Remove a TrusteeLGIn a previous post, we covered the things trustees do that can lead to their being removed from that position. After you’ve identified where a trustee has abused this position of trust, and as you seek to have the offending trustee removed, the next step is to petition the court for that removal, and to appoint a successor.

It’s important that you work with an experienced probate litigation attorney on the petition process. This area of law is complex (even for lawyers). If you are unfamiliar with probate litigation, you risk increased delays and costs if things aren’t filed or presented correctly.

A trustee can be removed either by the terms of the trust or by court order. If you need to remove a trustee, the first thing is to contact a probate and trust litigation attorney who can help you put together a plan for removing the trustee.

If the trustee can’t be removed under the terms of the trust, then this will have to be done by going to court. The petition to the court should include specific details explaining why the trustee should be removed. If possible, include evidence to support your case (usually documentation such as copies of checks made out to the trustee or other evidence of the misuse of the trust’s funds or assets).

Your attorney will review the case to determine if your situation qualifies as an emergency (this can speed up the process in cases where the trustee is spending money or otherwise reducing the value of the trust).

Here’s an example of one such emergency case:

One family had a large amount of gold bullion owned by the trust. The bullion was kept in a safe in the home of the family member who was managing the trust.  Other family members noticed that the trustee had bought several new cars and expensive jewelry for his wife. The family suspected the trustee of using the bullion to fund these extravagant personal purchases.

After reviewing the case and gathering evidence that showed exactly those things, I helped the family petition for emergency status to remove the trustee. We were able to get an immediate court order freezing the assets and requiring that the remaining gold bullion be transferred to a secure storage facility.

Although you need to gather evidence of wrongdoing once you notice something wrong, the funds may not be returned. It is extremely difficult to recover money once it’s been spent. Waiting and hoping things work out rarely works out well. It’s better to take immediate action if you think a trustee is acting improperly.

Don’t be afraid to consult an attorney. Look for one who will work to protect the value of the trust while exploring ways to resolve disputes.

If you have any questions about removing a trustee or need help protecting your inheritance from an ineffective trustee, comment below or contact our office.

We’d love to help.

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  • 19
    Aug 15
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How to Remove a Trustee

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How to Remove a TrusteeNot everyone works out. And you have the right, as a beneficiary of a trust, to petition to remove the trustee of the estate if he or she proves to be incompetent, hostile, dishonest or otherwise unable to fulfill the responsibilities of administering the trust.

Here’s a quick definition of a trustee and a summary of the duties of the position.

A trustee can be a person (or a trust company) who has legal title to property, who holds that property for the benefit of another and who has assumed a legal duty (also called a fiduciary duty) to act in the best interests of the beneficiaries of the trust. As you can imagine, things can go awry.

Here’s an all too-frequent scenario from a recent case:

In a case involving a prominent Phoenix family that operated multiple businesses owned by their trust, the father had passed away a number of years earlier. The mother continued running the businesses, gradually turning over control to her adult children. One of the sons took control of the trust after the mother developed dementia.

The son used the money from the trust to enhance properties he would ultimately inherit. He also bought himself a new car and started taking lavish cruises and vacations.

My clients – the siblings of this trustee – turned to me for help. First they obtained evidence of wrongdoing. In this case, they were able to get copies of checks written from the trust directly to the trustee. This gave us enough to petition the court and get the son removed as trustee and replaced with a private fiduciary.

Trusts can be set up to allow for safeguards in case of wrongdoing. That is, they contain trigger points that can lead to the removal of a trustee.

For trusts that don’t specify a mechanism to remove a trustee, the court recognizes other reasons. Here are three:

  1. If the trustee has committed a breach of the fiduciary duties of care over the assets or loyalty to the beneficiaries. Examples include failing to pay taxes, stealing assets, and not following the specifications of the trust.
  2. If the trustee is unfit, unwilling or persistently fails to act in the best interest of the beneficiaries and the trust, the court can remove the trustee.
  3. In come cases, the circumstances surrounding the trust can change significantly or all qualified beneficiaries can request the removal of the trustee. The court can review the case and remove the trustee if it deems this for the best interest of the beneficiaries, as long as this isn’t inconsistent with the original specifications and intent of the trust.

If you are the beneficiary of a trust, it’s important to know what to do if the assets are being mismanaged. Trusts are normally very private affairs. In addition, trusts, being civil matters, are outside the jurisdiction of the police. There’s typically no court supervision and no government regulation to make sure that the trust is being run properly. It’s up to you and your attorney to pay attention to how a trust is being managed.

You need to take immediate action if you believe money is being misused. Proactive action increases your ability to protect your inheritance. Contact an experienced probate attorney at the first indication that a trustee is unethical or irresponsible with trust assets.

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  • 29
    Jul 15
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How to Remove a Personal Representative

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How to Remove a Personal RepresentativeSome situations in the handling of an estate warrant the removal and replacement of the executor (called a “personal representative” in Arizona) who’s been appointed by the court.

Although the person accepting the position agrees to comply with a list of laws and court orders, sometimes the representative falls short for some reason.

If the PR fails to perform the expected duties, then the deceased’s family and beneficiaries can seek help from probate court.

During the first few months of a representative’s term, when this person is learning what is required to administer an estate, the probate court is somewhat lenient. After a period of time, however, if the representative hasn’t fulfilled the required specified duties or followed procedures properly, the person may be removed as personal representative.

A PR can be removed for any of four basic reasons:

  1. If it’s in the best interest of the estate;
  2. If the personal representative had lied in the court proceeding leading to that person’s appointment as personal representative;
  3. If the personal representative disregarded a court order, has become incapable of discharging the duties of being personal representative, has mismanaged the estate, or has failed to perform any duty pertaining to the office of personal representative;
  4. If it is shown that the personal representative has intentionally disregarded the decedent’s wishes with regard to disposing of the decedent’s remains.

If you find that the PR is not fulfilling the duties of the position, the first thing you need to do is gather evidence. If it concerns the misuse of the estate’s funds, evidence can include documents such as copies of checks written to the personal representative or a copy of the deed showing that the PR transferred the decedents’ house to him or herself.

Evidence needs to be concrete. That is, the court usually does not accept situational evidence or hearsay as evidence to support removal of a PR. An example of hearsay might be a neighbor telling you that the PR said that he or she was going to steal the estate’s money or assets.

Evidence to support the removal of a personal representative can also include:

  • The fact that you have not received an inventory of the estate more than 90 days since the personal representative was appointed
  • The fact that the estate has been open for more than a year and the personal representative has not filed the required annual accounting.
  • The decedent’s house has not been listed for sale a year or more after the appointment of the personal representative.

In our firm, we frequently help families who need to remove personal representatives. It’s usually not a single incident that leads to this: In most cases the personal representative has done between five and 15 things incorrectly.

If you’re a personal representative and need help understanding and performing your duties, we can also help. If you need assistance in removing a personal representative to protect your loved one’s legacy, we can help with that, too.

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  • 25
    Mar 15
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Trust Management: 3 Top Mistakes Trustees Make

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Trust Management 3 Top Mistakes Trustees MakeServing as a trustee is a big responsibility that can be complicated and confusing. It’s easy to fall into trouble if you’re misinformed or careless in the trust management. Keep in mind these three pitfalls when serving as trustee:

  1. Breaching fiduciary duties. Fiduciary duty is the highest legal duty of care recognized by the U.S. legal system. The most common example of breaching duties is when a trustee uses the trust to pay for personal expenses or purchases.
  2. Failing to keep beneficiaries informed. Trustees have the duty to keep beneficiaries “reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.” Thus, beneficiaries are entitled to periodic accountings showing investments, disbursements and expenses. If a trustee is not transparent with these actions, he or she may be subject to legal action.
  3. Breaking the law. This can involve theft – the most common way a trustee may break the law – or the failure to pay taxes.

A trustee who doesn’t act in the best interest of the trust may be subject to consequences in civil court. The most common of these – for trustees who are also beneficiaries of an estate – is a surcharge, which is a legal term under probate law for a type of lawsuit that will reduce the trustee’s portion of the inheritance to return any losses to the trust that have been incurred because of mismanagement by the trustee. A trustee can also be personally liable for losses resulting from mismanaging assets in the trust.

If you’re concerned that a trustee is mismanaging your loved one’s trust, it’s important to seek help  immediately from an experienced probate attorney.

Many people want to avoid going to court to resolve their probate issues, but probate court exists to help families sort through the process of settling an estate. In fact, probate court can be particularly beneficial when a trustee is either a family member or a friend, because emotions and stress can complicate these situations.

If you’re a trustee and feel over your head in fulfilling your duties, attorneys can help you avoid pitfalls. You don’t have to do it alone. Consider hiring an attorney, bookkeeper, accountant or even a corporate trustee to work with you. A little bit of help can prevent not only mistakes but undue stress during an already-stressful time.

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