The Special Needs Trust was established for the benefit of LBG. The Trust was funded with the proceeds of a settlement obtained for LBG’s benefit as a result of injuries he sustained at the hospital in the days after his birth. The sole purpose of the Trust is to provide for LBG’s lifelong care. The bank was selected by LBG’s family to serve as the trustee.
Annual Accounting of Trust
The probate court approved the 6th through 10th annual accounts without issue. However, at the hearing on the petition to approve the 11th annual account, the probate court raised questions concerning the attorney fees and fiduciary fees that the bank charged to the Trust. The accounting indicated that the trust had gained $29,892.78 in income, had incurred $41,313.19 in expenses, and had a remaining balance of $810,995.85. The court was concerned that the attorney fees of $1,117 and the fiduciary fees of $15,511.53 seemed high in relation to the size of the Trust.
The court stated that it would approve the accounting but cautioned that it would be keeping a close eye on the matter. The court added that it had experience with cases where large institutions abused trust funds.
On April 13, 2020, the bank filed its 12th annual petition to allow accounts. The accounting indicated that the Trust had gained $55,507.94, had incurred $97,933.80 in expenses, and had a remaining balance of $768,569.99. This time the attorney fees and costs were $6,3554.63 and the fiduciary fees and expenses were $14,955.50. At the hearing on the petition, the court asked what the bank did for Fifteen Thousand Dollars. The bank’s lawyer stated that the bank provided a myriad of services.
Guardian Ad Litem (GAL)
The court suggested that Bank was using the Trust’s money to invest in its own products. The court appointed a guardian ad litem (GAL) to offer an opinion on the reasonableness of the fees charged by the banks, by the lawyers, and the distribution of money. On October 19, 2020, the GAL submitted a report to the court. The court questioned whether the fees, which were standard for the bank, were reasonable for the Trust. The Court reiterated its concern that this particular Trust cannot afford the bank as a trustee.
Removal of Trustee
On March 19, 2021, the court entered an order allowing the 12th annual account, removing the bank from its role as trustee, and appointing a new fiduciary to serve as successor trustee.
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