Maryland law imposes high standards on trustees and personal representatives. These are the top six warning signs that a trustee or a personal representative may be breaching his or her fiduciary duties to a beneficiary. If some or all of these red flags are present, it is a good idea to contact a lawyer to protect your rights.
Lack of communication
If you are a beneficiary of a trust or a will, the trustee or personal representative has a duty to communicate with you. If that fiduciary is ignoring or evading you, this may result from a lack of understanding of his or her duties to you, but it may also be an important warning sign that the fiduciary has engaged in misconduct or is actively hiding misconduct and hoping you give up and go away. Put your communications with the trustee in writing.
A refusal to share a copy of a trust or will
If you are a person who is a beneficiary under a will or trust, the trustee has a duty under Maryland law to give you a copy of the trust. E.T. § 14.5-813(a). While Maryland law does not expressly impose a duty on a personal representative to provide a copy of the will to a beneficiary, it is a public document on file in the courthouse. A personal representative’s refusal to give a beneficiary a copy of the will is a red flag because there is no good reason to refuse to provide a copy to a beneficiary.
A failure to maintain records
A fiduciary such as a trustee or a personal representative owes a duty to maintain records of financial activity and assets. I once had a case involving a trustee who was sued for a failure to account for his use of trust assets. His explanation was that he did not maintain records because he was “an electronic guy,” and he claimed he would just lose paper receipts. This is no excuse. Maryland law is clear that “[i]f the trustee fails to keep proper accounts, all doubts will be resolved against him and not in his favor.” Jacob v. Davis, 128 Md. App. 433, 448 (1999).
Financial records that reflect payments or withdrawals to “cash” or other suspicious transactions
When financial records are obtained, it is important to scrutinize the financial transactions closely. Do the bank records reflect $3,000 in trendy clothing and makeup purchases while an elderly man was in hospice care? Do the bank records reflect $10,000 in cash withdrawals? While it is possible there may be a legitimate reason to make a cash withdrawal from a fiduciary account, it is a red flag for the obvious reason that cash withdrawals are difficult to track and these untraceable funds can easily be misappropriated by a fiduciary.
The decedent “told” the trustee or personal representative to conduct financial transactions that amount to financial malfeasance
When highly suspicious transactions are discovered, it is a red flag if the fiduciary’s response is that the questionable conduct was authorized based on a conversation between the fiduciary and the decedent (as opposed to written approval by the decedent of the transaction in question).
A refusal to disclose financial activity of the estate or trust
A fiduciary such as a trustee or a personal representative owes a duty to account to beneficiaries. A personal representative owes a duty to account for his or her management and distribution of estate property. E.T. § 7-301. If requested by a qualified beneficiary, a trustee shall provide an annual “report” on trust activity. E.T. § 14.5-813(c)(1).
If you encounter any of these challenges, any attorney experienced in fiduciary law can help you assess the situation and determine what steps may be appropriate.
