What are the risks of being a beneficiary with a trustee you can't trust? 30 Answers as of May 29, 2013

My partner and I are planning to marry. He has about $5 million in investments that he inherited from his father. When we marry, these will remain in his name and if he dies before I do, they will go into a trust with me as beneficiary and his sister as trustee, as he wants the money to stay in his family. We will likely not have children ourselves, rather than 'risk' my willing part of the money to my own niece and nephew. His sister is a lawyer (not an estate lawyer) and not entirely mentally stable. His niece, who would inherit after I pass, is also already in and out of mental health care institutions. Very nice people, but not a family I trust to have my best interests at heart. This sounds too risky to me - if I'm at an advanced age and suddenly have to rely on someone else to let me sell my home, take care of myself, live day to day. He doesn't seem to understand the problem, as he says I would 'have use' the money as I need, though his sister would have to sign off on things. I'm really concerned. The issue isn't wanting money, it's being subject to someone else's control. Any advice? Thank you!

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O'Keefe Legal Services, L.L.C.
O'Keefe Legal Services, L.L.C. | Sean P. O'Keefe
In Maryland, a beneficiary may risk the trustee not doing a good job as trustee, such as breaching fiduciary duties. It may be wise to consider naming a different trustee, or co-trustees with independent authority to act if a particular trustee is the only problem.
Answer Applies to: Maryland
Replied: 5/29/2013
THE BROOME LAW FIRM, LLC
THE BROOME LAW FIRM, LLC | Barry D. Broome
Your question is too complicated to answer. I would recommend that you hire an attorney to help you with this.
Answer Applies to: Georgia
Replied: 5/29/2013
Law Office of Pamela Braynon | Pamela Y. Braynon
When it all boils down, it is his money. I suggest that if you don't trust his sister to follow through on her assignment as trustee, that you see to it that you have all the particulars on the trust. If you can get a copy of the instrument itself from your partner. Then once he passes away you will have a copy of the instrument to show to your lawyer to ensure that the trust is being followed. If that is not sufficient for you, you should start making provisions for ensuring your maintenance after your partner passes away.
Answer Applies to: Florida
Replied: 5/29/2013
Shimberg and Crohn, P.C. | Jonathan Shimberg
Frankly there is little if anything you can do other than continue to attempt to persuade your partner to name someone other than his sister as trustee. Naming a bank will result in substantial trust fees that his sister may not be charging. You sister would not be willing to place her law license in jeopardy by acting improperly with respect to the trust.
Answer Applies to: Illinois
Replied: 5/29/2013
S. Joseph Schramm | Joseph Schramm
The trustee of a trust is charged with a fiduciary duty of care to discharge their duties according to the the terms of the trust. The trustee is usually accorded some discretion as to how the funds are managed and distributed and this can occasionally cause tension between an individual trustee and the beneficiaries of the trust. In your case, should you suspect the trustee of mismanagement of the funds, deliberately refusing make a distribution she might be obligated to make or otherwise violating the terms of the trust you would be able to file an action asking for an accounting, reimbursement of funds lost or stolen and, if necessary, replacement of the trustee.
Answer Applies to: Pennsylvania
Replied: 5/29/2013
    Law Offices of Frances Headley | Frances Headley
    You should discuss alternative trustees with your intended and an estate planning attorney.
    Answer Applies to: California
    Replied: 5/29/2013
    Law Office Of Victor Waid
    Law Office Of Victor Waid | Victor Waid
    You are strongly advised to seek the assistance of a estate planning lawyer, for beneficiary representation, and planning your own estate. You are right to be concerned, as I would be. Do not delay, as you have valid concerns, and they may be more present then you realize or accelerated by future events over which you have no control.
    Answer Applies to: California
    Replied: 5/29/2013
    Ronald Main & Associates | Tracian M. Laignel
    Get a copy of the trust. Make sure the wording in there provides for your standard of living and future medical needs. Make sure that instead of a "life estate" in the home, you have the power to sell it and use the proceeds as you desire, etc. There can be more than one trustee and if you are worried that the sister will not do right by you, ask for an additional trustee to be added and the sister made co-trustee along with the other individual or institution. I say institution as banks are known to be trustees as well.
    Answer Applies to: Oklahoma
    Replied: 5/29/2013
    James Oberholtzer, Attorney at Law
    James Oberholtzer, Attorney at Law | James Oberholtzer
    You are right to be worried. If there is not a good family member to act as trustee, you can use a friend, a professional (accountant or lawyer usually) or an institutional trustee (bank or trust company).
    Answer Applies to: Oregon
    Replied: 5/29/2013
    Goldsmith & Guymon
    Goldsmith & Guymon | Dara Goldsmith
    The trustee is a fiduciary. If you have issues you can always petition the court for intervention.
    Answer Applies to: Nevada
    Replied: 5/29/2013
    Frederick & Frederick PLC | James P Frederick
    Sounds like a mess to me. You might consider having a disinterested third party, like a bank, handle this. That would take the mental issues out of play. It would also make it more likely you will wind up with a trustee that you can deal with, let alone trust.
    Answer Applies to: Michigan
    Replied: 5/29/2013
    Reger Rizzo & Darnall LLP | Kathleen DeLacy
    The trustee owes the beneficiary a fiduciary duty so if they mis-handle or abuse that duty you do have the opportunity to have the removed and another appointed. A trustee should be someone the trustor should be able to trust, though.
    Answer Applies to: Delaware
    Replied: 5/29/2013
    Dennis E. Valentine Law Firm
    Dennis E. Valentine Law Firm | Dennis Valentine
    Perhaps your prospective husband would agree to use a professional third party trustee. The trust will be large enough to warrant appointment of a financial institution or professional trustee to handle the trust. That may take care of your concerns about the trustee. However, your question raises other issues because your husband would have the ability to change his will or trust. Both of you would be well advised to talk to an attorney that prepares pre and post marital agreements. Especially in second marriages where the parties have different assets and obligations, a pre marital agreement can protect both families and clear the air as to how financial affairs will be handled.
    Answer Applies to: Colorado
    Replied: 5/29/2013
    Minor, Bandonis and Haggerty, P.C.
    Minor, Bandonis and Haggerty, P.C. | Brian Haggerty
    It's a classic problem. You will be going, hat-in-hand, to sister month after month, asking to spend money she already considers hers. The quandary is exactly as you pose it, and there is no easy answer. Will you be ready to sue your sister-in-law?
    Answer Applies to: Oregon
    Replied: 5/29/2013
    The Law Office of David L. Leon
    The Law Office of David L. Leon | David L. Leon
    Consider a corporate trustee, such as a bank.
    Answer Applies to: Texas
    Replied: 5/29/2013
    Irsfeld, Irsfeld & Younger LLP | Norman H. Green
    Consider an independent trustee.
    Answer Applies to: California
    Replied: 5/29/2013
    Scott Polsky
    Scott Polsky | Scott Polsky
    This is his money, so it is under his control. That said, there are a lot of planning techniques that you can use to minimize your concerns. I strongly recommend that you speak with an attorney before you get married to work everything out.
    Answer Applies to: Pennsylvania
    Replied: 5/29/2013
    Peters Law, PLLC
    Peters Law, PLLC | Mark T. Peters, Sr.
    You need to take the trust document to an attorney and have it reviewed. Typically, there are protections in place if the trustee is unable to serve and they may be there. It will be worth the money to know where you stand.
    Answer Applies to: Idaho
    Replied: 5/29/2013
    Loren Lambert
    Loren Lambert | Loren Lambert
    If you have influence, then tell him to pick someone else. If he won't, he doesn't have to.
    Answer Applies to: Utah
    Replied: 5/29/2013
    James Law Group
    James Law Group | Christine James
    The reality is your husband's inheritance is his and he doesn't have to provide for you at all. That said, perhaps you can discuss with him the idea of him giving you a specific gift amount upon his death for you to take care of yourself and he can go ahead and give his fortune to his family in trust separately. Otherwise, unless you can get him to see your perspective, you are likely stuck with what he decides since it is legally considered his separate property. Good luck.
    Answer Applies to: California
    Replied: 5/29/2013
    Sebby Law Office
    Sebby Law Office | Jayne Sebby
    You have a couple of options: 1) You can try to convince your partner to name someone other than his sister to serve as trustee, or 2) The trust document should be carefully drafted to explain exactly when and how the assets should be distributed to you (for example, X dollars transferred to your checking account on the first of every month to be used for Y expenses but not Z expenses. Or you can refuse the assets of the trust altogether and live on your own income and/or savings.
    Answer Applies to: Nebraska
    Replied: 5/29/2013
    Robert E. Giffin | Robert E. Giffin CPA
    Lady you have a problem. Why not have the trust provide you $xxx.xx dollars per year to use anyway you want. These dollars are automatic and don't need the trustee approval.
    Answer Applies to: Ohio
    Replied: 5/29/2013
    Attorney At Law | James G. Maguire
    These family matters always make life interesting. It is doubtful that you could change his mind about naming the trustee, so you will probably have to live with that. A trustee can be removed from office if he/she is not abiding by the terms of the trust. The trustee can also be ordered to what the trust tells her to do, but either would involve legal proceedings, which you should avoid if possible. Just try to stay on good terms with the trustee, if he doesn't want to change that designation, and hope that she can hold things together when the time comes.
    Answer Applies to: Louisiana
    Replied: 5/29/2013
    Arthur H. Geffen, P.C.
    Arthur H. Geffen, P.C. | Arthur Geffen
    If you are in Texas as the question indicates, you are going to need the assistance of lawyers who practice in LGBT area who are familiar with how to draft instruments that will hold up after a partner's death as well as those institutional trustees that would be interested in being trustee of this kind of trust. There are all sorts of tax problems here, so be sure and seek competent advice.
    Answer Applies to: Texas
    Replied: 5/29/2013
    Law Offices of Phillip Day
    Law Offices of Phillip Day | Phillip Day
    Tough question and no real easy answer. Consider your options. You could choose not to marry and when he passes, you would be free of his family and money with no one controlling you. The negative of that option is fairly obvious. Option 2, is to to marry him and be subject to his sister the trustee controlling the monies as you need them. Sounds painful but the purpose of the trustee is to protect the interests of the trustor's wishes (your partner) and not necessarily you. You as the beneficiary get the fruits of his wishes which may come with strings. But under option 1 there is no strings and no money. Unless you are financially independent, you can always go for option 3, which is to ask your partner to pick a different trustee, such as a bank or if he balks, his sister and someone close to you so as to provide a balance. You cannot blame him for wanting to accomplish two things, one, to provide for you and second to keep the reside of what you don't need within his family. This is normal. There is another option as well, and that is to have him buy a life insurance policy on his life, assuming he is insurable, payable to you. This way, if he passes prematurely, he can bequeath his fortune to his family and leave you with the life insurance proceeds. Over time, the need for insurance will go down, and the fear of the untrusting sister as trustee won't matter as much if you have insurance proceeds at your disposal.
    Answer Applies to: Florida
    Replied: 5/29/2013
    Law Offices of Gerald A. Bagazinski
    Law Offices of Gerald A. Bagazinski | Gerald A. Bagazinski
    You may want to consider a prenuptial agreement. It would spell out the rights of the parties relative to inheritance or divorce.
    Answer Applies to: Michigan
    Replied: 5/29/2013
    Law Offices of Robert H. Glorch | Jeffrey R. Gottlieb
    Only thought would be for you to openly discuss your concerns with him and any alternatives. If he wants a co-trustee with you, possibly a professional trustee, like a bank, would be a good choice. These are also issues he can discuss with his estate planning attorney who can discuss pros and cons and any alternatives.
    Answer Applies to: Illinois
    Replied: 5/29/2013
    Kokish & Goldmanis, P.C.
    Kokish & Goldmanis, P.C. | Bernard H. Greenberg
    Yes, here is an easy fix to this issue. He should name a bank or trust company as the trustee. Additionally, he should include a provision that would permit you to replace the trustee with another bank or trust company.
    Answer Applies to: Colorado
    Replied: 5/29/2013
    The Krone Law Firm, LLC | Norman B. Krone
    Suggest an institutional Trustee, such as a bank.
    Answer Applies to: Florida
    Replied: 5/29/2013
    Bruce Steiner Attorney at Law | Bruce Steiner
    If his sister is not entirely mentally stable, perhaps she might not be the best choice as trustee. Perhaps he might name one or more other persons, or a bank or trust company, or one or more other persons together with a bank or trust company, as trustee(s). You could be one of the trustees. He could give you the power to remove and replace the trustees (provided the replacement trustee is not a close relative or subordinate employee). He should also make sure his Will is appropriate from an estate tax standpoint.
    Answer Applies to: New York
    Replied: 5/29/2013
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