Colorado probate law – abuse of trusts

Posted by: Jun 27, 2013By Brian Stutheit

Our  Colorado probate lawyers have just finished two cases in which the creation of a trust backfired.  The heirs would have managed better with a simple trust and a court supervised probate estate.  In each case, the decedent had chosen, or been persuaded, to do a trust in order to avoid probate.  The decedent’s property then went into the trust where the single trustee did as he wished with the property.  In one instance, he lent himself trust funds in order to buy investment property.  In another, he refused to tell the other beneficiaries/heirs where the trust assets were invested.  The trustee’s actions were of course illegal, but the heirs were frustrated because they had no forum to enforce proper trustee behavior.  Only in court may subpoenas issue, depositions be ordered, and accounting required.  We solved the problem by going to court, opening a probate and forcing a full accounting which in each case resulted in removal of the trustee by the court.  Instead of avoiding the expense of probate, the trust actually created problems which required the opening of probate to fix.

Some simple thoughts to take away from these cases:

*  Before you write a trust, understand if it is really necessary, and will really save money over the long run.  Ask about the difference in attorney fees between a will and a trust, probate savings, tax issues and costs when you create a trust.

*  If your heirs don’t get along, never name one heir trustee thereby shutting out the others.

*  If you are a beneficiary who is not getting information from the trustee, don’t wait.  Act before the trustee wastes the trust assets or makes it hard to track what happened.