We are members of Family real estate trust containing 4 comercial buildings in Massachusetts that generates rental income to us beneficiaries. My uncle has been serving as Trustee (and is beneficiary also ) since trust started (1970). My uncle had agreement drawn up in year 2000 telling all other beneficiaries that he decided he needed to be paid for all his work, pay equal to 7% of gross income. He generated a document and had all benificiaries sign. Now in 2013 he has formed a property management LLC with his 2 children and himself as manager. He has hired his LLC as management company without our consent or knowledge. Salary and compensation we feel are way out of line. Now he charges us 14% of gross and takes a months rent for any new lease or lease renewal, all office supplies and other needs are billed to us as additional expenses. He gives his company full control over trust finances. We are left in the dark. Is this fair and legal or is he breaking his duties and creating a illegal conflict of interest. Do we have any legal rights to stop this? Should he have notified us before contracting himself and determining his compensation? Help please We do not want to disrespect our uncle but this seems to be a move that is not in everyone's best interest. It serves only him and his immediate family.
1 Answer from Attorneys
This appears to be blatant self-dealing by your uncle. Either the trust agreement or the 2000 agreement likely controls on the amount of compensation that is reasonable, but if even if it doesn't, it is likely that a court scrutinizing the trust and your uncle's action would conclude that the compensation is excessive, and would order him to disgorge the amounts deemed excessive. Additionally, this seems like a situation where some thought should be given to a petition to have him removed as trustee. This would likely require two separate petitions to be brought in the probate court: one for removal and one to recover the excessive fees. The court does have the right to award attorney's fees in either or both cases. In any event, you should definitely consult with an attorney regarding your rights and remedies.