Trusts are powerful instruments for preserving family assets for future generations, but setting them up properly is very tricky. When Washington residents set up a trust, they appoint a trustee to be in charge of the principal assets. The trustee must maintain the trust for the benefit of the beneficiaries, but has a fiduciary duty to the trust, to ensure that it is financially solvent. Sometimes the two interests can compete with each other.
In recent months, the mother of teenage twin heiresses has been engaged in an extended court dispute with the trustees who were appointed to look after the girls' inheritance. The trusts, which represent inheritance from the famous philanthropist and tobacco heiress Doris Duke, reportedly hold $14 million for each girl. When they turn 21, they will receive their full inheritance, which will be worth an estimated total of $500 million. The terms of the trusts reportedly allow the girls' mother to withdraw funds on an emergency basis, but the trustees argue that she has abused that right, and taken more than $1 million for her own benefit.
The trustees claim the mother tried to use the girls' money to buy herself a $29 million ranch and other property. A court ordered her to answer their accusations, but she reportedly didn't show up for a scheduled hearing in late June and process servers have been unable to get to her in the weeks since then.
Trusts aren't just for the wealthy. For all kinds of families, they can be very useful for avoiding the expensive and cumbersome probate process. However, they can lead to conflict. The trustee has a duty to maintain the trust principal; the beneficiaries may have disputes with each other or with the trustee. It's important for Washington residents who are thinking of setting up a trust to get help understanding the variables and possibilities.
Source: NJ.com, "Report: Doris Duke heirs' mom, accused of draining daughters' trust fund, trying to avoid court," Meghan D. Hodgin, July 10, 2013