When you are creating a will or revocable trust as part of your estate plan, you need to think carefully before selecting someone to act as a personal representative or trustee. Many people just go with their nearest relative, such as a spouse or eldest child, but a fiduciary’s role is not ceremonial. An executor or trustee must be financially responsible and demonstrate the willingness to comply with legal deadlines and court orders. Failure to do so can lead to a substantial delay in administering your estate or trust.
Daughter Ordered to Repay Father’s Trust Due to Her “Bad Faith” Misconduct as Trustee
For example, a Wisconsin appeals court recently had to address–for the second time–the case of a trust and probate estate that has remained open for nearly five years due to the “bad faith” misconduct of the person originally named as trustee and personal representative. The estate was originally opened in 2015. The decedent and his late wife had also created a revocable living trust. They named their daughter as fiduciary for both.
Unfortunately, the daughter proved unable (or unwilling) to meet a number of deadlines set by the court for closing her father’s estate. After blowing two deadlines, the estate’s attorney withdrew from the case. The daughter, now representing herself, pleaded for additional extensions of time, which she got and still failed to meet to the court’s satisfaction.
Another beneficiary of the estate and trust filed their own petition with the court, seeking a final accounting and distribution of assets. When the daughter failed to appear at the hearing scheduled on that petition, the probate court finally lost patience and proceeded to remove her as fiduciary over both the trust and estate. In 2016, the Wisconsin Court of Appeals, District II, affirmed that decision.
More recently, the Court of Appeals upheld a follow-up order from the probate court requiring the daughter to reimburse the trust approximately $22,000 for costs related to her earlier misconduct. While trustees and personal representatives are not normally held personally liable for mistakes made in connection with the performance of their duties, Wisconsin law does permit such “surcharges” if there is evidence that a fiduciary “engaged in misconduct or acted in bad faith.”
Here, the appeals court said there was “ample support in the record” demonstrating the daughter acted in “bad faith.” It pointed to her multiple failures to comply with probate court orders related to the trust, including directives to file a final accounting and notices to appear at scheduled hearings. To put it bluntly, the Court said she failed to “promptly move the administration of the Trust along,” and even after her removal as fiduciary she “continued to act in bad faith” by failing to cooperate with the successor trustee named as replacement.
Get Advice From a Madison Estate Planning Lawyer Today
The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.
Contact our office by calling (608) 268-5751 to schedule a free consultation or use our online contact form.