What should you do if you discover that a trustee has a conflict of interest as to a trust or its beneficiaries? Whether you are a beneficiary, a trust settlor, or another interested person, you might be negatively affected by the conflict of interest. There are a few steps you can take to address the situation.
- Identifying a Conflict of Interest
While determining whether there is a conflict of interest for a trustee is ultimately a legal question, you may have noticed signs that something is not quite right with the trust. A conflict of interest may result when:
- The trustee uses trust money to purchase his or her own personal or business property.
- The trustee favors one beneficiary over the others.
- The trust property has suffered major losses in value recently.
- The trustee has not provided an accounting for the trust.
- The trustee will not make a distribution to a beneficiary and will not give a reason for it.
Some of these situations could have perfectly innocent explanations, but in other cases they may indicate a conflict of interest for the trustee. The trustee may be placing personal or business interests above the interests of the beneficiaries. In all cases, the trustee must maintain a duty of care and a duty of loyalty as to the trust property and beneficiaries. This requires making prudent investments, communicating with beneficiaries, and managing all aspects of the trust responsibly.
- Addressing the Conflict of Interest
You have a few options when attempting to address a conflict of interest outside of the courts. First, you should consider speaking to the trustee directly. There may be a good reason for the trustee's actions that do not involve a conflict. If you are a beneficiary, you can ask for documentation explaining the transaction or decision.
If the trustee does not offer a good explanation or does not communicate with you, then you may need legal assistance. You can pursue a trust dispute informally or escalate it to the courts. Sometimes, negotiating and resolving a dispute in mediation can save time and money. Other times, going to court can help to ensure that the trustee complies with the his duties more efficiently. Your lawyer can evaluate the conflict and suggest methods of resolving it.
To find out more about trust conflicts of interest in The Bahamas, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.
The hiring of an attorney is an important decision that should not be based solely upon the information contained in this website. This website is designed for general information purposes only and the information provided should not be construed to be formal legal advice nor the formation of an attorney/client relationship.
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