Claims examples

Trustee Liability Claim Examples
  • A trust's assets declined significantly due to decisions made by the trust's investment advisor. The trustee was sued for failure to properly select and supervise the investment advisor, for failure to ensure that the assets were invested in accordance with the trust's objectives, and for negligence in tax planning. The case was finally settled after protracted litigation.

 

  • A trust reduces its annual contribution to a charitable beneficiary. The charity begins an investigation, and determines that the trust has begun making contributions to other charities. It brings an action against the trustee, claiming that its distributions have been wrongly diverted to other organizations. It also brings an action against the law firm that wrote the trust document, claiming its drafting negligence deprived the charity of millions.

 

  • A family office provided services to a number of family trusts. One trust was offered an opportunity to sell shares it owned back to the company at market prices; the other trusts were not offered the same opportunity. On advice of counsel, the family office sold the shares back, and did not extend the offer to the other trusts (it may not have had the right to). Subsequently, the price of the stock fell dramatically, costing the other trusts substantial losses. Beneficiaries of these trusts brought an action claiming breach of fiduciary duty for not extending the buy-back offer. The action went to trial, and the defendants won. However, legal expenses exceeded $1.0 million.

 

  • A family trust has a range of assets, but the most significant asset is a private company. The company is put up for sale and sold to a group of investors. The group is not the highest bidder, but has the most solid financing plan. A small beneficiary of the trust is a non-profit organization, which will benefit from on-going distributions by the trust from the sale of the company. The State Attorney General begins an investigation of the sale, and brings an action against the trustee for failure to accept the highest bid for the company. The Attorney General has a right of action because of the non-profit beneficiary.

 

  • A trustee desires to diversify the trust's assets, and puts some of the funds into a large, well-known mutual fund. Subsequently, the mutual fund sustains significant investment losses. An action is brought by the beneficiaries against both the trustee and the advisor for failure to follow prudent investment guidelines and failure to invest in accordance with the trust's objectives. After months of discovery, the case settles to avoid continued escalation in defense costs.
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