- May 2, 2024
- Posted by: legaleseblogger
- Category: Related News
Try Free Now: Legalese tool without registration
## Trust Fund Situation: Dealing with Frustration and Inaction
My father’s passing at a young age left me with a trust fund managed by his brother. The trust contains his life insurance, and I only received my first accounting last year, at age 19 (now 20). To my surprise, the money is sitting in a checking account, barely earning any interest.
I expressed my concerns to the trustee, urging him to invest the funds in treasuries for the benefit of the beneficiaries, myself included. While he made the transfer in December of last year, he failed to specify the amount allocated. Now, I am eagerly awaiting the 2023 accounting.
The lack of growth and proactive investment of this life-changing sum is frustrating. It almost feels as though the trustee is intentionally hindering its potential growth. I struggle with the belief that he questions my worthiness of the funds, especially considering my lack of a paternal figure and a stepfather who neglects his children.
Despite receiving some funds for my Roth IRA and education expenses, I am limited in how I can use the money until I turn 28. The idea of waiting another eight years is disheartening, leading me to yearn for a more aggressive approach to investing the funds, such as dollar-cost averaging into ETFs over a 5-6 year span.
### How AI Legalese Decoder can Help:
The AI Legalese Decoder can assist in deciphering the legal jargon and complexities surrounding trust funds. By providing easy-to-understand explanations and guidance, it can empower individuals like myself to navigate the intricacies of trust management and advocate for their financial interests. Additionally, the AI tool can offer insights on potential courses of action, ensuring that trust beneficiaries are informed and equipped to make informed decisions about their financial futures.
Try Free Now: Legalese tool without registration
AI Legalese Decoder: Helping to Simplify Legal Jargon
Legal jargon can often be complex and confusing, making it difficult for the average person to understand. AI Legalese Decoder is a cutting-edge technology that can help individuals navigate through the complexities of legal terminology with ease. By using advanced algorithms and machine learning capabilities, AI Legalese Decoder is able to break down complex legal language into simple and easy-to-understand terms.
With the help of AI Legalese Decoder, individuals can feel more confident in their understanding of legal documents and contracts. This innovative tool can save time and hassle by quickly translating legalese into plain language, allowing users to make informed decisions without having to rely on costly legal advice.
Whether you are a business owner reviewing a contract or an individual facing a legal issue, AI Legalese Decoder can be an invaluable resource. By providing clear and concise translations of legal jargon, this technology empowers users to take control of their legal matters and make well-informed decisions.
Don’t let legal jargon stand in your way – with AI Legalese Decoder, understanding complex legal language has never been easier.
****** just grabbed a
Obtain a copy of the trust document. As a beneficiary, you are entitled to it by law, in most states.
Read the document, and find the prioritized list of successor trustees (who takes over if the current trustee ceases being trustee).
Your trust is probably too old to have this, but some newer trusts have something called a “trust protector”. This is someone whose only power is to remove the current trustee if, in their judgement, the current trustee is not performing satisfactorily. If your trust has a “trust protector”, contact them.
Assuming your trust doesn’t have a “trust protector”, then if you can’t convince the current trustee to quit, then your only option would be to go to court and try to have them removed.
Also see if the trust says anything about how the trust funds are to be invested (it probably doesn’t say anything specific, but you can at least check). If the current trustee is not investing them appropriately for the purposes of the trust, that would be grounds for having them removed.
You can sue him and force a new trustee
FYI you can’t contribute to a Roth if you have no earned income from a job.
As others have said get your hands on a copy of the trust and go from there.
Whether you deserve the money or not, your father wanted you to have it, and your uncle agreed to serve as trustee and to take on the fiduciary duty to you. I’m a trustee myself, and while I would never invest the money in something terribly risky, leaving it all in a checking account would feel downright irresponsible to me.
It might be worth sitting down with him and an inflation calculator to show him how much value the trust has lost by being left in what is effectively just cash. Then it might be worth going through an investment calculator and showing what could have been gained had the money been invested conservatively.
Beyond that, I would take a look at the terms of the trust your father drew up. There may be a mechanism there to allow you to petition for a new trustee. For example, your mother (if she is still alive) might have the authority to remove your uncle. The trust might be sent to a professional trustee, but it sounds like that might be preferable.
Do you have a copy of the trust?
Any trustee has a duty to properly invest the money. I am way old and long retired by this used to be the Prudent Investor rule and basically required a reasonable % in equities. However that may have changed over time. But do some googling and figure out what the requirements are today. Then let him know as he is responsible to you for the shortfall that happens by not investing it. A short meeting with a local estate planning attorney is likely worth your time. Also repost this in r/EstatePlanning and you will get actual EP attorney’s anwering.
https://www.fidelity.com/insights/investing-ideas/glossary-prudent-investor-rule#:~:text=INVESTOR%20RULE%3F-,The%20prudent%20investor%20rule%20is%20a%20legal%20guideline%20for%20trustees,for%20legally%20controlling%20investment%20portfolios.
So did he put it into Treasuries after you asked?
I take it your father wanted you to have the money, so his opinion of whether you deserve should matter for jack squat. This is your future that will be affected , so him not investing that money correctly needs to be fixed.
I dealt with this 10 fold.
My uncle ends up as successor trustee. After several long discussions and a couple huge arguments wherein he said he wanted to make like 350,000 worth of somewhat unusual disbursements, we started looking into attorneys and options.
Unfortunately, my uncle had some decent connections in the legal department, and basically knew exactly how much could potentially go missing without crossing that cost-benefit threshold of filing a lawsuit.
It was bad, we even have recordings of him saying he wanted to disregard the rules of the trust, more or less faked documents and notes saying my dad wanted to make changes to his will, and threats to have us removed from our grandmother’s estate (which ultimately worked and we were disinherited).
Anyway, you are going to need more than “We want more aggressive investments”. Your uncle is acting as a fiduciary and his sole responsibility is to follow the instructions of, and preserve the value of the assets under, the trust.
As a beneficiary, you are *ENTITLED* to a copy of that will and or trust. Read it. Word for word. Understand it and look up anything you dont. The read it again. If anything is suspect, $200-$300 buys you a reading and interpretation of that document from an actual estate or probate attorney.
If you don’t trust your uncle, you can do a forensic accounting and see if there is any foul play. Check your states laws about recording in-person conversions and make sure you get everything from here out saved to the cloud. You can then file a complaint with the state that the trust was written in and attempt to have him removed.
You will then have to take the next-named person in the trust as successor trustee. Usually there is a second or even third person or entity named in succession.
In our case, the alternate successor was unfit, and the title was more or less honorary (93 is no age to be handling that many zeros).
But, I will say that when we followed that route, our attorney advised against us appointing ourselves, as there are certain legal protections afforded by the assets being under trust.
Anyway it’s somewhat difficult and $5+8k to get the ball rolling on removing someone, and if he doesn’t want to go, he is usually legally entitled to use your trust funds to fight you in court. Also, there are often clauses about you raising hell or contesting the trust, so make certain you fully understand the risks involved if you file a formal complaint.
A lot of time, trustees are entitled to certain expenses. You may be able to to take arbitration and agree to give him a year or two worth of “expenses” up front in exchange for “consulting” and recusing himself as trustee.
TL:DR you need to prove that he is a bad actor to get him removed. It’s a somewhat expensive and lengthy process, especially if he chooses to fight. Even if you win, there’s no guarantee that your next successor will be willing to put the funds, that they are legally responsible to protect, into “risky” or “alternate” investment holdings.
TTL:DDR Find an estate or probate attorney to give you a qualified opinion and battle plan.
The people telling you to sue, are not telling you the whole story. While you can do that, and you might win, YOU have to pay your legal fees out of your own pocket, and the trustee gets to use the trust assets to pay HIS legal fees, and if you get him removed, it’s a safe bet that the trust administration expenses will go through the roof.
This is a common problem in trusts when the wrong person is chosen as the trustee.
You seem smart and like you know what you’re doing. You need to talk to the trustee. You need to explain to him that he has a fiduciary duty to you meaning he has to act in your best interest and that he’s held to the “prudent person” standard, and you let him know that when you can find 5%+ rates on liquid funds in low risk investments vs zero in a checking account, that he’s not being prudent, and is liable to you for the lost income should this get ugly.
Tell him that if he’s too busy, you’ll do the leg work so that he can sign off on it to put that money to work.
You probably don’t want to fire him or get him removed at this time. Nothing in your story sounds like he’s stealing just that he sucks at investing the money. Most trust’s successor trustee would be a commercial entity that will have outrageous fees consuming the trust’s investment income. These people also tend to hire attorneys to interpret the trust, charge fees to then buy mutual funds that charge more fees, and CPAs to do tax returns.
This will be a test of your negotiating skills. You don’t want him to be defensive, but rather get him to agree that there is some low hanging fruit to substantially up the returns without too much risk and isn’t a lot of work because you’ll be doing it and he just needs to provide a signature. If invested correctly and at the right place, the paperwork can take care of itself and actually simplify the trustee’s tasks.
As far as waiting until 28, to get access to the money, you probably can get access to money just the same. Trusts typically have a HEMS (health, education, maintenance and support) paragraph. The trust can pay all your medical bills, clothes, rent, electricity, phone, car, insurance all kinds of stuff. My ex-step sister is a beneficiary of a trust, and she just got her trustee to start paying all the costs associated with her house and car because her personal money was taken when she filed for bankruptcy. You’re young and probably don’t have any other resources so start HEMSing the money for your benefit. You don’t have to live like a pauper.
> Never attribute to malice that which is adequately explained by stupidity
Most people *are* genuinely financially illiterate. I work for a bank, with people whose day jobs is analysing macroeconomic conditions and companies, yet I discovered the other day that majority of my colleagues have no idea where their pension is invested and had just left it in the default fund…
It sounds like your uncle is at least a bit receptive to guidance, but is just out of his depth and maybe a bit lazy. Ask him if he’d consider depositing the money into a brokerage account, then give you the password so you have de facto control even though it’s still in the trust. If he’s nervous about giving you control (as he should be as a trustee), see if you can find a financial adviser who can execute the strategy you want without charging too horrendous fees, then try convince your uncle to deposit the money with them and ask to either liaise with them directly or attend meetings with the adviser with him.
If he outright refuses to invest the money properly, you can consider getting lawyers involved etc – but that’s always expensive, messy and long. If you can resolve it amicably, you should try. I suspect you can, so long as you give him options that allow him to fulfil his duty without too much effort on his part.
About 40 years ago, a trust was set up for a minor we knew. It took agreement by a judge to invest their money in anything other than a pass book savings account. In this case, money market funds were used. Very low risk.
Most likely, stocks of any kind would not have been allowed.
But this was 40 years ago, and the rules may have changed.
I’m sorry but the irony of the title misspelling has me in a hold
Maybe you’re confusing his financial illiteracy for an intentional act. He probably doesn’t understand investments but he’s not intentionally screwing you.
Honestly I would probably try and buy him out of it. I doubt he doesn’t think you should have the money and more that he doesn’t get much of anything for being the manager.
Get a lawyer to arrange all the finer points, but basically make the offer seem like “Let us take this off your plate, you’ve done enough for us and we want to repay your stewardship”.
You sound very responsible and reserved for your age, and you are right that money could do you a lot of good. Sorry it’s kind of off topic, but I wouldn’t resent your father for the age of 28 though. I suspect when you get to that age and look back, you may be grateful, although again you do sound quite mature. It will be okay.
Ask the trustee to go with you to a financial advisor from here
https://www.napfa.org
ETFs are not guaranteed. Investments are not either. These are changing times and black swans are more likely. Triple leveraged inverse ETFs are a popular thing. It may seem unfortunate and frustrating but maybe waiting will just have to happen.
Are you asking the internet if you can get your hands on some money that a trust specifies you can’t until you turn 28?