A trustee has a very important role. He or she will be in charge of distributing trust assets and managing trust property for the benefit of trust beneficiaries. If a trustee fails to meet these responsibilities, not only will the trustee hurt trust beneficiaries, but he can put himself in a precarious financial position. For example, in one case where the trustee reportedly acted in bad faith, he wound up paying some of the legal fees trust beneficiaries incurred.
The recent Utah case of Warner v. Warner entailed a 15-year long dispute between the trustees and the trust beneficiaries of a family trust. In the end, the Utah Court of Appeals held that the trustees were required to pay a portion of the beneficiaries’ attorney fees incurred in defending against the trustees’ appeal of the district court’s ruling. The trustees had to pay the fees from their own personal funds because they breached several fiduciary duties and made transfers in bad faith. The court, however, did limit the award to the actual fees the beneficiaries incurred as a result of the trustees’ bad faith conduct.
The Court also held that trustees cannot reimburse themselves from trust funds for the payment of their own attorney fees incurred in connection with their bad faith conduct. The Court held that trustees may only be reimbursed from trust funds when the trustees act in good faith. This was a good result, because the Trustees were not acting in good faith. This case highlights the need for selecting the right Trustee, and the need for Trustees to find good legal counsel.
The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about trustee responsibilities, or if you have reservations about serving as a trustee, contact The Astill Law Office at 801-438-8698.