Cumming, GA asked in Consumer Law, Contracts, Estate Planning and Family Law for Georgia

Q: I'm in Georgia. I am suing a large Bank as my FBO Trustee. The actual person was incompetent & milked account for 7 year

Refused to release a small portion 5 years ago for a house purchase. Psychological harm, then they invest the money and refused to honor my wishes to take profits and then set it aside for home purchase when the trust would expire 12/31/22. The amount in fees was about 40% of the start amount. The trustee was abusive and ran the trust to keep me dependent on the trust. Also denied me the right to use the trust finds to pay off a mortgage as I found a mortgage lender who would accept my low income only with those trust funds.

1 Lawyer Answer

A: I am not a Georgia lawyer and you absolutely should consult a Georgia attorney with your situation. But, ordinarily, things like refusing to honor your wishes to release funds for the mortgage, etc. aren't good claims against a trustee by a beneficiary. A Settlor puts money into a trust for a beneficiary because he/she doesn't want the beneficiary to be able to do whatever they want with the money. So that is usually not a winning argument. Your argument needs to focus on the Settlor's wishes as stated in the terms of the trust instrument. For example, if the trust provides that the trustee "shall" make distributions from the trust corpus for the purchase of a home or for shelter for the beneficiary, you could argue that the trustee breached the terms of the trust documents by refusing to do so, assuming the statute of limitations has not run. (5 years could be too long to make such a claim in Georgia, which is one of many reasons why you need to consult a Georgia attorney).

On the other hand, a trustee absorbing 40% of the corpus of the trust in fees looks a lot like self-dealing and could constitute a breach of fiduciary duty by the trustee. Milking or "churning" an account for fees is a recognized cause of action if that is what occurred. The success may turn on the size of the trust corpus. 40% of $50,000 for services as an institutional trustee lasting five+ years isn't much; but 40% of $1 million is quite a lot. But, in either case, it depends on the nature of the trust assets. Cash money on deposit in a CD requires less active oversight than managing a portfolio of investments, for example.

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