Trusts can be a significant part of your estate plan. Some investors may decide to transfer securities into a trust, or leave them as part of their estate to their beneficiaries.
Assets that are transferred into a trust are taken out of the estate for the probate process. The expectation is that the beneficiaries will later have the benefit of the investments after the original owner passes in accordance with the deceased’s wishes.
Occasionally, a person will also select a stockbroker or other financial services person to serve as a trustee. A trustee and/or executor are supposed to act in the best interest of the beneficiaries. However, this isn’t always the case.
A fund’s trustee has the job of overseeing the funds in the trust, and keeping extensive records of all funds coming in and payments going out. This is in addition to preparing tax returns for the trust.
The creator of the trust usually selects a trustee. The individual selected could be a spouse, child or other family member. The creator may also choose someone with a suitable skill set, such as an accountant, attorney, or financial representative.
Because the trustee has direct access to a trust’s funds as well as its information and financial records, it’s vitally important to choose the right person for the job.
A Stockbroker’s Responsibilities
FINRA regulations prohibit a stockbroker from becoming heavily involved in a client’s trust or estate, and usually only if it involves a family member. Stockbrokers and other similarly employed individuals have a requirement that they notify their employer firm that they are named in a client’s will or estate.
Unfortunately, sometimes a stockbroker isn’t notified until the client passes away, creating a conflict situation with their firm. In other cases, the stockbroker may have intentionally become a beneficiary, trustee and/or executor with the intent to benefit from a client’s estate.
Breaching Fiduciary Duty
Stockbrokers and other financial services representatives who have a relationship with their clients may take advantage of their client’s trust. Breaching that trust may not be immediately obvious, requiring the help of a forensic accountant. Examples of this kind of breach include:
- Misappropriation of funds and taking for personal use
- Comingling client funds with their own
- Creating losses
- Wills, trusts, or other instruments that are implemented by someone whose death is impending
- A will that favors the stockbroker over a surviving spouse, children or other family members
- A substantial amount of money gifted just prior to the individual’s death
- Delaying of estate or trust administration, giving time to maneuver assets
- Self-dealing—modifying the trust’s terms, wasting assets, or otherwise inappropriate actions
These are just some of the signs that a stockbroker or other financial representative may have stolen from a trust or estate. Individuals committing acts such as these can face a considerable number of civil as well as criminal charges.
If you believe a stockbroker has violated a trust relationship, it’s time to speak with a stockbroker misconduct attorney immediately.
Stockbroker Theft From A Trust Or Estate? Call Attorney Scott Silver
Trust/estate fraud is a part of elder financial fraud. If you believe your trust or estate has been the victim of a dishonest stockbroker or other financial representative, get help immediately from an experienced trust fund fraud attorney.
Scott Silver has been helping victims of stockbroker fraud and other misconduct by financial representatives since 2002, and has recovered millions of dollars in claims for our clients. We work with clients nationwide, and offer a free consultation to discuss your case. Most of our cases are handled on a contingency fee basis, and you won’t owe us until we recover money for you. Help is available, and we understand your situation. Contact Silver Law Group today, and we will discuss your case and talk about what we can do to help.