Q. My mother-in-law passed away in 2010. Her will said her three children would share her estate equally after debts were settled. Her daughter, my sister-in-law, was the executor. She had her two brothers relinquish their rights to everything. I’m not sure how that happened. Then I was asked to sign away my three sons’ rights to the estate, which were passed to them after their father and uncle relinquished their rights. I refused to sign those documents, and the will was probated without them. Now I’ve learned there was a testamentary trust created because I didn’t sign away my sons’ rights, and my sister-in-law is the trustee. We requested an accounting of the trust but my sister-in-law refused. We have since learned my mother-in-law’s home, which was in the trust, went into foreclosure because my sister-in-law didn’t pay the mortgage. The home was sold at auction, and we’re told my sons are not entitled to anything. Do they have any legal rights? Should we fight?
A. Something here seems very fishy.
It sure sounds like your sister-in-law has done her best to keep your mother-in-law’s estate and trust a secret. This is not appropriate or acceptable, said Richard Miller, an attorney and chair of the elder law department at Mandelbaum Salsburg in Roseland.
Miller said executors and trustees serve in a fiduciary capacity.
“The term fiduciary comes from the Latin word `fiducia’ meaning `trust,’” Miller said. “A fiduciary has the legal obligation to act for another – a beneficiary – in a fair, honest and transparent manner.”
Although executors and trustees have the legal authority to manage the affairs of an estate or trust, Miller said, he or she is accountable to the beneficiaries for his or her actions and must disclose information to keep the beneficiaries reasonably informed.
When an individual passes away, the executor is required to notify, in writing, all beneficiaries named in the will as well as all heirs at law, such as individuals entitled to inherit by intestacy, that a will has been probated, Miller said. This must be done within 60 days of the will being probated.
Miller said the executor is also obligated to provide a copy of the will upon request. This process is in lieu of the “reading of the will” often portrayed in TV and movies. After receiving the notice of probate, individuals residing in New Jersey have four months to contest the will. Those living out-of-state have six months to contest the will.
“Requesting a copy of the will enables individuals to review the contents, including any testamentary trusts that may be established, such as the one created for the benefit of your children,” Miller said. “Once appointed, an executor is required to settle and distribute the estate as expeditiously and efficiently as possible.”
Executors and trustees have a duty to collect and preserve assets, deal impartially with beneficiaries and act at all times with the best interests of the estate and trust in mind to ensure the estate and trust is distributed according to the decedent’s wishes, Miller said.
In addition, a fiduciary has a duty to account to the beneficiaries.
“If a beneficiary has questions or concerns about how an estate or trust is being handled, he or she may request an accounting and copies of supporting documents,” Miller said. “New Jersey Court Rule 4:87-1(b) permits any interested party to compel a fiduciary to account formally in court. New Jersey Statute 3B:17-2 directs that a fiduciary may be requested to account one year after his or her appointment.”
Also, in 2016, New Jersey enacted the Uniform Trust Code (UTC).
Under the UTC, Miller said, a trustee is required to keep beneficiaries reasonably informed about the administration of the trust and material facts necessary for the beneficiaries to protect their interests. The trustee shall promptly respond to the beneficiary’s request for information related to the administration of a trust, he said. If a fiduciary willfully neglects or refuses to render an accounting or breaches his or her fiduciary duties, an application can be filed with the court to remove the executor or trustee.
So, your sister-in-law’s contention that she is not required to disclose information or provide an accounting is simply incorrect. To the contrary, Miller said, your sister-in-law, if requested by your children or their representatives, is likely obligated to provide an accounting dating back to 2010.
“To the extent the accounting reveals improprieties, your sister-in-law could be personally liable for misconduct, including the legal fees associated with bringing the action,” Miller said. “It should be noted, however, that under the UTC a beneficiary may not commence a proceeding against a trustee for breach of trust more than six months after the date the beneficiary or representative of the beneficiary was sent a report that adequately disclosed the existence of a potential claim for breach of trust and informed the beneficiary of the time allowed for commencing the proceeding.”
So the timing here is important.
To fully evaluate the legal rights and claims of your children as beneficiaries of the testamentary trust, Miller recommends you consult an attorney experienced in New Jersey probate litigation.
Email your questions to moc.p1540234780leHye1540234780noMJN1540234780@ksA1540234780.