Minnesota families sometimes set up trust funds to help their children or grandchildren with their financial needs after they’re gone. These can be a great way to keep a sense of family legacy together through generations. However, the work involved doesn’t end once all the documents are signed and dated. The trustee must perform its duty to the trust principal and the beneficiaries must not interfere with each others’ rights to the fund. When something goes wrong, it can lead to lawsuits over misuse of funds.
A woman was recently ordered to appear in court to answer questions about her use of cash from a trust fund that was designed to take care of her 15-year-old twins. The siblings are heirs to a $60 million fortune that came largely from their great aunt, the philanthropist and tobacco heiress Doris Duke. Their father was Duke’s nephew, but he died some time ago, leaving them in the care of their mother. The trust funds were available to take care of their financial needs, and Citibank and J.P. Morgan administer the trust funds.
The banks allege that the mother has been taking money out of the funds to support herself, spending more than $1 million of the children’s money since 2010. She allegedly sought money from the funds to buy gold coins for herself and a $29 million ranch. Under the terms of the trust, she is apparently allowed to withdraw funds on an emergency basis, but the banks claim she has been abusing that right. The banks are seeking receipts showing how she is spending the money. The woman denies that she has misused the funds and argues that the banks have been breaching their fiduciary duty.
It’s often uncomfortable for family members to get involved in legal disputes, especially when the arguments seem to pit one generation against another. However, trustees do have legal duties to watch out for the financial interests of the trust’s beneficiaries.
Minnesota families engaged in disputes over inheritance should get help investigating their legal rights. It is important that everyone involved understands their roles and their rights when it comes to financial issues such as trust funds.
Source: New York Post, “Mom of twin Duke fortune heirs ordered to court after allegedly blowing $1M of their inheritance,” Julia Marsh, May 8, 2013