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1 Out Of 4 Beneficiaries Refuses To Sign Dispersement Receipt

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1 Out Of 4 Beneficiaries Refuses To Sign Dispersement Receipt

Postby Bradbourne » Sun Jul 20, 2014 11:49 am

This is a follow-up question and I apologize for the length but want you to have all the details and tell me your opinion of how this situation might turn out, or what our family can do. My mother passed away 7/17/2008 in Illinois. My sister, the Trust Executor and a beneficiary has done everything on the advice of top notch Trust Lawyers, fee only financial planners, OBRA Lawyers and Trust Accountants. Every "t" has been crossed, every "i" dotted, she made no decisions without legal counsel and followed our mom's Trust instructions 100%. She has kept 2 out of 3 of her siblings involved in every step, the 3rd sibling refuses to talk to her. The distribution receipts, full accounting for the Trust Expenses and full accounting for the $25,000.00 executor fee to cover 771 hours of work were submitted to ALL beneficiaries from the Trust Lawyers thru fax with hard copies in the mail for the $650,000.00 estate. The 3rd sibling is our baby sister out of state. From the day our mom died, this sibling REFUSED to speak to our older sister, the Executor and tried to go to the lawyers, fee only person, banks, etc. directly to see when she was going to receive her 25% share, she even did this at the funeral, visitation and luncheon. Of course, these various professionals told her she had to speak to her sister, the Executor, because they work for Executor, not the baby sister. Our baby sister will not confirm she has received certified mail, will not respond to emails, will not return voice mails or answer her phone. In over a year, I have asked my baby sister 12 times to please contact our older sister, the executor. She REFUSES. She takes my calls, but will not confirm with me she has received correspondence so she can claim she has been kept in the dark. I and the Trust Lawyers have certified receipts of mailings that her husband signed, but he refuses to talk to me. He called the Trust Lawyers to complain and says his wife is to distraught to speak to her Executor sister. Why? because the baby sister has made up her mind that the older sister, the Executor has self-dealt in her fiduciary position, accuses the Executor of brainwashing the only brother who has an OBRA trust into selling his stock(he was the legal owner) to me and the Executor sister(because the state of IL will recover it upon his death for receiving SS and Medicare/Medicaid) from our father's trust which our older sister IS NOT THE EXECUTOR or TRUSTEE and our brothers OBRA lawyer did the stock sale on our brother's wishes after a valuation was done. We were not even allowed in the lawyers office when his made out his will/trust and stock sell agreement. We were only allowed together when me and the Executor sister signed our stock sale and gave our brother the checks for payment. Our brother stated then that he DID NOT WANT TO SELL HIS BABY SISTER any of his stock. Long story short, the baby sister is angry that after 25 years of treating our disabled brother like CRAP and not helping her sisters take care of his medical needs and dialysis, he decided not to leave her or sell her anything now or upon his death in his will/trust. So out of spite, the baby sister has hired a lawyer and is contesting the executor fee and the stock sale and stated their "client" wanted resolve without going to court, which has now not allowed distributions to be made to the the other beneficiaries who could use the money and want to get on with their lives after a year of hell. The day the Executor sister received notice of this from her/the trust lawyers, she ended up in the emergency room with heart attack symptoms, being upset that her own sister would do this to her. Our mother's trust says that any beneficiary who challenges has 3 months to "put up or shut up" and accountings are only required yearly. The Trust lawyers responded to our baby sister's lawyer saying everything is legitimate and the Executor would not lower her fee based on the accounting that backs up her work to protect the Trust. The letter also explained that the stock sale had nothing to do with our mothers Trust, the stock came from our father's trust and his bank was the trustee. The executor sister does not want to rack up anymore charges but this has now caused the Trust to go into a 2nd Trust year with additional expenses, etc that also went in the letter to baby sister's lawyers. Our baby sisters lawyers have NOT RESPONDED IN 1 MONTH to the trust lawyers letter and the executor sister is calling her lawyers in 2 days to see how to proceed, now she is just mad and hurt and wants this over but will not give into the baby sisters demands and I and our brother stand behind our Executor sister 100%. What advice do you have, this has fractured our family so badly that the honor and memory of our parents is beyond repair.

ANSWER: I am so sorry.  This again highlights one of the reasons that I am recommending to more and more of my clients that they "bite the bullet" and hire professional trustees to administer their trusts.

I'm not sure exactly what you want me to tell you at this point.  It sounds like your sister's lawyers are doing all the right things.  The only good news I can offer you is that your baby sister cannot claim she did not receive notice and a copy of the accounting now that her lawyers have received it on her behalf - under the law she is deemed to have "constructive notice" of the information(frankly, I think she'd have a hard time making a judge believe she didn't receive notice back when her husband signed for the certified mail, but it sounds like the executor's lawyers are being extra cautious).

Since you do not say what state the trust is being administered in, I don't know how effective the 3 month "put up or shut up" clause might be.  Judges tend to be fairly generous about making sure that everyone has received notice, but they also get downright irritated when someone starts playing games with them.

So I don't think the accounting is much of an issue.

The executor/trustee fee might be an issue, though.  Unless the trust was extremely difficult to administer(for example, because the trustee had to run a business), a fee of 3.84%($25K/650K) on a non-taxable estate seems pretty high.  A professional trustee in California would have probably charged less than half that to administer a trust of that size(I'd estimate that a professional would have charged between $7,500 and $12,000 as an annual fee.  Of course, that's a totally uninformed guesstimate on my part).

But frankly, the difference($13,000 to $17,000) is not worth going to court over - you could eat up that much in lawyer's fees before the first hearing.

If I had to guess, I'd say your baby sister's lawyers told her that she has a losing battle on her hands.  They probably asked for a healthy retainer($15,000 - $20,000) to represent her(and told her that her chances of winning were poor) and she hasn't paid it.  They probably have decided that they aren't going to invest any more time in the case until they're sure they're going to be paid, which would explain why they aren't responding to your executor sister's lawyers.

I'm not a psychiatrist, but your baby sister seems to be very passive aggressive.  The good news is that I think she's tripped herself up.  She can no longer claim she doesn't know what's going on because her lawyers have a duty to keep her informed.  So the accounting issue is off the table(I'm sure they provided her with a copy of it as soon as they received it from the executor's lawyers).  And your baby sister can't pursue the executor's fee dispute without paying a lot of money in lawyer's fees that she won't get back(and since she was so hungry for your parents' money, she probably doesn't have an extra $15 - $20 grand sitting around to give to lawyers).  She's painted herself into a corner.

Sounds to me like your executor sister is in pretty good shape overall.

Let me know if you were looking for something more specific.

This information is not intended to substitute for professional legal advice and does not create an attorney-client relationship. You should accept legal advice only from a licensed legal professional with whom you have an attorney-client relationship.

---------- FOLLOW-UP ----------

Thank you so much for your prompt attention. Our family does understand your answer is just an opinion and gives us peace of mind because 3 out of 4 siblings agree with you on every point. Our mother's Trust is being administered in Illinois, to answer your question on the validity of the clause in the trust that a beneficiary has 3 months from receiving accounting to contest anything. My 3 siblings and I have been estranged from our baby sister for 25 years, despite many efforts on our part to become a family again. We wanted your opinion before my Executor sister called her Trust lawyers in 2 days(which will cost us all!) to see how long the baby sister can hold us all hostage in this nightmare. The executor sister's work on this trust was very complex in regards to our brothers OBRA trust setup for his own good, and she works 40-50 hours a week as a nurse and flew from IL to Kansas every 3 months to coordinate care for her autistic 21 year old daughter who lives at HeartSpring and suffers seizures. This was in addition to sharing duties with me in taking our brother to dialysis 3 days a week, doing his shopping and tending to his personal needs. We have all known she would be Executor for over 11 years and our mother picked the correct sibling for the job. Does this give you any additional insight to your original answer? Finally, this experience caused me and my husband to revise our trust for our 3 children and none of them will be Executor.
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1 Out Of 4 Beneficiaries Refuses To Sign Dispersement Receipt

Postby Kinsley » Wed Jul 23, 2014 5:24 pm

I really don't see how your baby sister can hold you hostage in this for much longer.  The only question that I see is whether the Illinois courts will uphold the clause that gives her only 3 months to contest.  Since I don't practice in Illinois, I don't know how strictly they would enforce this.

If your executor sister kept good time records regarding the hours she spent and if she has good reasons for spending as much time on the trust as she did(which it sounds like she does), then it doesn't sound like your baby sister has much of a case.

Although it would cost some money, if it would provide your executor sister with peace of mind, she could ask her lawyers about filing an "executor's report" or a "trust accounting" with the probate court that spells out exactly what she did and what benefit there was to the trust and ask the Judge to approve it.  There's a risk that "baby sister" might try to stir up some trouble, but I doubt it.  Once a judge has approved the executor sister's report, "baby sister" is out of luck.

That's all I can think of.

Good luck(and I'm glad you revised your own trust!)

This information is not intended to substitute for professional legal advice and does not create an attorney-client relationship. You should accept legal advice only from a licensed legal professional with whom you have an attorney-client relationship.
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