RMO Case Spotlight

Background 

Our client came to us in June 2023 seeking to assert her rights as a beneficiary of her late mother’s family trust. Following her mother’s passing, the family home had been sold for over $1 million. Unfortunately, our client faced significant resistance from her sister, who had been acting as the trustee since their mother lost capacity in 2018. The trustee’s control of the trust was marked by secrecy and abuse of power, refusing to disclose any information about the trust’s assets, income, or expenses. The trustee was domineering toward the trust beneficiaries, withholding critical details regarding the trust’s terms, beneficiary interests, and the expected distribution to our client.

In early 2023, our client confronted her sister, demanding to see the trust document. The sister and her spouse reacted with anger and told our client she would be “lucky” to receive even $10 from the trust. The sister disclosed her plan to drain the trust and distribute its assets to herself and her spouse as caretaking fees, a claim that shocked our client, who had also cared for their mother without expecting compensation. Feeling betrayed and distressed, our client reached out to RMO for guidance.

Solution

We immediately took action by demanding an accounting from the trustee. However, the trustee’s counsel followed a familiar pattern of stonewalling, making empty promises while becoming increasingly evasive. They claimed our client wasn’t entitled to an accounting until they resolved claims against the trust, including the self-serving caretaking fee. It became clear that the trustee and her legal team had no intention of providing transparency or allowing our client to inherit fairly from the family trust. The trustee, having always enjoyed a financial advantage, sought to use this power imbalance to grind our client down until she gave up.

Our client, however, refused to be intimidated.

We filed a lawsuit to compel the trustee to provide a full accounting of the trust. The trustee produced the trust agreement but continued to refuse to account for the trust’s actions. As pressure mounted, the trustee finally presented a partial accounting, but it only began in 2023, a glaring omission of the crucial period from 2018, when she first became trustee. The trustee falsely claimed she didn’t become trustee until after their mother’s death, despite the trust specifying that she would take on the role once their mother became incapacitated.

The partial accounting exposed the trustee’s plot. Instead of draining the entire trust, the trustee and her spouse were attempting to charge $244,000 for caregiving fees and planned to take an unknown amount of trustee compensation. Our client, still determined, refused to accept this inequitable treatment.

Results

We amended our lawsuit to include claims for breach of trust, based on the trustee’s refusal to provide proper disclosure and her self-dealing caretaking claim. We also filed a motion to remove the trustee and appoint a receiver to manage the trust. As the hearing on our motion neared, the trustee finally produced trust records from 2018, revealing that she and her spouse had already paid themselves caretaking fees during their mother’s lifetime.

With this new information, we entered mediation. After six hours of mediation, the trustee finally made an offer. She demanded that the trust pay herself and her spouse $244,400 for caretaking fees, an additional $100,000 for trustee compensation, and further amounts for reimbursements and executor fees. Her strategy was to wear our client down through exhaustion.

Our client remained resolute and held out for her fair share of the trust.

After more negotiation, the trustee finally capitulated. She dropped her $244,000 caretaking claim and $100,000 trustee compensation fee. Instead, the trust would cover all of our client’s attorney fees, and the trust would be distributed equally between our client and her two sisters, just as their parents had originally intended. What started as a promise of nothing for our client ultimately resulted in a fair distribution, with our client set to receive around $350,000.

Our client graciously allowed the trustee and her spouse to retain the caretaking fees they had paid themselves during their mother’s lifetime, acknowledging that the amount was likely in line with private caregiving costs.