Trust Issues: What To Do When A Beneficiary Thinks A Trustee Acted In Bad Faith?

Location: Illinois

Before he died (when we were very young), my grandfather made trusts for each of his grandkids. Regular trusts for myself, my sister, and my two cousins. A special needs trust for my brother who was born with a developmental disability. As I understand it, my father was made the trustee of my cousins’ trusts and my uncle the trustee of my siblings‘. After my grandfather died, when my older cousin was going off to college, my father and uncle swapped because it would be easier for him to go through his dad for access.

The trusts have been a tricky subject over the years. At one point my brother was kicked off social security because this trust had taxes filed incorrectly (according to my dad; he and my mom are long divorced and she was surprised by the notification that bro was being taken off SSI). When I asked him about it later, he said it was a mistake by his accountant. Then when asked about the money in the trust, my dad told me he had ‘gifted’ it away, including using my brother’s special needs trust to pay for my and my sister’s college educations. My mom eventually got my brother back on SSI, which is important not for the (pathetic) income it provides but for the qualification for services should he need them someday.

My dad didn’t actually show me my trust or talk about it until 2021, when I was 30+ years old. At the time it had between $150-$200k in it, and he took some out to help me pay for a down payment. I saw at the time that my sister’s had less.

The next year she also asked for money to use for a down payment. After cashing some out, she said there was still about $30k left in her trust.

In 2024 he put me in touch with the trust managers at Morgan Stanley to take control of the remainder of my trust. I did so, and closed out the account, transferring the remaining money/investments to a personal account. When my sister asked to do the same for hers, he said there was nothing left. They got very adversarial, with her accusing him of taking her money and asking for trust documents/bank records. He refused.

The issue: recently, my sister was talking to our cousin. She learned that cousin’s trust, when she received it to go to college, had over half a million dollars.

My sister is talking about suing our father. Does she have a case? We don’t have any original documents, and when my sister contacted Morgan Stanley they said they couldn’t give any records unless our father asked for them. My cousin was willing to provide her documents, but apparently they were drafted by a different trust lawyer back in the day because her father was already a client of theirs, so they don’t have any of ours. I was grateful at the time to get the money I did, but what happened to my brother’s trust never sat right, and knowing there may have been so much more originally intended is really difficult to deal with.

My dad was the trustee. I don’t know exactly what the duties involved are, but if he was left managing the money however he wanted, is there really anything that can be done? Is it just our bad luck that the person in charge of our accounts may have mismanaged them, or worse?

Also, my sister has been trying to look up lawyers, but everyone who says they deal with ‘trusts’ just mean that they can set them up. Does anyone deal with messy aftermath?