Trustees must manage resources according to the instructions provided by a trustor. They may need to distribute resources to beneficiaries and make decisions about the management of key assets to preserve their value.
In some cases, they may end up accused of mismanagement if their choices diminish the value of the trust. Communications from a trustee, including annual accountings regarding trust resources and notice of the intent to liquidate trust assets, can provide beneficiaries with an opportunity to take action for their own protection.
Undervaluing resources can damage the trust
If a trustee intends to sell trust assets to make financial distributions to beneficiaries, they should ensure they understand the fair market value of those resources. Significantly undervaluing trust assets before listing them for sale might result in the trust receiving less capital than beneficiaries deserve, given the overall value of resources.
Beneficiaries may be able to take legal action to prevent the sale of trust resources for less than their fair market value if they learn about a proposed transaction before its completion. In cases where a trustee has already damaged the value of the trust, it may be possible to remove them from their position and replace them with someone more competent or trustworthy. Beneficiaries may even be able to hold a trustee financially accountable for failing to uphold their fiduciary duty.
Reviewing communication from a trustee and concerns about their asset management with a skilled legal team can help beneficiaries assert their rights through trust litigation. If trustees cannot competently manage resources or sell them for a reasonable amount, then replacing them with someone better able to do so may be a beneficial decision.