What is a Trustee’s liability for gross negligence?
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What is a Trustee’s liability for gross negligence?
My father passed in 2007, my sister and I were left orphaned and homeless at ages 17 and 19, respectively, at which point his life insurance death benefit was paid into the trust. His sister, our aunt, was the initial trustee. Against my objections, my aunt proceeded to “invest” the bulk of the trust corpus in non-collateralized speculative ventures (stocks, mutual funds) through several wealth management agencies. Approximately $425,000 was lost 3 years ago. Is this gross negligence? I’m also told she may have violated other aspects of MD law.
Asked on September 14, 2011 under Estate Planning, Maryland
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
I am so sorry for your loss and for the ensuing problems. I think that you and your sister should consult with an estate attorney in your area who needs to read the trust in its entirety to see if there are any limiting provisions written in to it and to see how those provisions match up to state law on the conduct or trustees. Generally speaking, the issue of gross negligence (as well as fraud and willful misconduct) is carved out in case law and is very case specific. You need to compel her to file an accounting as a first step toward scrutiny by the court. You have a huge amount of money here in this case. You need to check out your rights. Good luck.
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