Chasing Down What a Trustee Lost in a Family Trust

The situation

Oksana and Taras had already sent four emails to their trustee before they called our office, each one more direct than the last, and each one answered with something that sounded reassuring but explained nothing. They had asked for account statements. They had asked what the trust's money was actually invested in. They had asked, plainly, whether a loss they had noticed on a summary statement was as bad as it looked. Every reply came back vague, and the fourth email had simply gone unanswered for three weeks.

The trust in question had been set up years earlier by Oksana's father, a testamentary trust created through his will to hold a substantial inheritance for Oksana and, eventually, for her and Taras's two young children. He had named Halina, a longtime family friend who worked as an investment advisor, as trustee, trusting her professional background to manage the money responsibly until the children were older. The trust held a little over four million dollars at its peak, built from investment accounts, a rental property, and life insurance proceeds.

Oksana, a specialist physician with a demanding practice, and Taras, who worked as an investment advisor himself at a different firm, had never had reason to question Halina's management closely. Taras's own professional background made him more attentive to the account statements than most beneficiaries would have been, and it was Taras who first noticed a line item he did not recognize: a substantial position in a private venture fund that did not match the conservative, diversified strategy the trust document called for.

By the time they came to our office, the position had lost more than half its value, and Halina's answers to their questions had stopped making sense. Oksana was frustrated in a way that went beyond the money. This was supposed to be her father's care for his grandchildren, managed by someone he had trusted personally, and it was slipping away while the person responsible for it kept deflecting.

Oksana and Taras had two young children, both under six, and part of what made the trust's steady, conservative structure appealing when Oksana's father set it up was exactly that it required so little active involvement from the family. Distributions for the children's schooling and activities came through on schedule, and neither Oksana nor Taras had ever needed to intervene. That was precisely why the unfamiliar line item on the statement stood out so sharply once Taras noticed it, and why the silence that followed their questions felt so unlike how the trust had operated for years.

The problem

A trustee's job is to manage trust property the way a careful, prudent person would manage their own affairs, and to follow whatever specific instructions the trust document sets out. Oksana's father's trust document was conservative by design, limiting investments to a defined mix of diversified funds and prohibiting anything described as speculative. The private venture position Taras had noticed did not fit that description by any reasonable reading, and once we reviewed the trust's full account history, it was clear the investment had been made without seeking the beneficiaries' consent or informing them in advance.

The deeper problem surfaced once we asked Oksana for every document she had signed related to the trust since her father's death. Among them was a form Halina had sent roughly a year earlier, described in an accompanying email as a routine update to the trust's investment authorization. Oksana, busy with a demanding medical practice and trusting a family friend, had signed it without reading it closely. That form, it turned out, included language broadening the trustee's discretion to include higher-risk investments, worded in a way that could plausibly be read as prior consent to exactly the kind of position Halina had made.

That single signature complicated what would otherwise have been a straightforward breach of trust claim. Without it, the private venture investment was clearly outside Halina's authority and the trust could have pursued recovery on relatively strong footing. With it, Halina's position had an argument, even if not a strong one, that the beneficiaries had authorized broader discretion and accepted the associated risk.

Time mattered as much as the document did. The venture fund's remaining value was continuing to erode, and every month spent negotiating over the meaning of a signed form was a month in which the trust's actual recoverable loss kept getting worse. The family needed a strategy that moved quickly enough to limit further damage while still taking the signed authorization seriously rather than pretending it did not exist.

There was also a professional dimension to the problem that Taras, given his own career, understood better than most beneficiaries would have. A licensed investment advisor acting as trustee is generally held to a higher standard than an ordinary family member serving in the same role, precisely because of the specialized knowledge involved. If Halina's conduct fell short of that standard, the authorization form would matter less than it might for a less sophisticated trustee, but proving that required more than a general sense that the investment had been unwise.

What we did

1. Obtained the full trust document and every amendment or authorization signed since Oksana's father's death, building a complete timeline of what Halina had actually been authorized to do at each point, since the case would turn on comparing her conduct against that authority precisely. Laying every document out in chronological order was what first made the gap between the trust's conservative mandate and the venture position impossible to argue away.
2. Analyzed the authorization form Oksana had signed to determine exactly how far its broadened language actually extended, concluding that while it expanded discretion somewhat, it did not clearly authorize a concentrated position in a single speculative private venture of this size. That careful reading, rather than a blanket claim the form meant nothing, gave the family an honest and defensible starting point for negotiation.
3. Requested a full accounting from Halina covering every transaction in the trust since her appointment, which is a trustee's basic legal obligation to beneficiaries and a request that cannot reasonably be refused or delayed indefinitely. Putting the request in writing, with a clear deadline attached, turned months of vague email replies into a formal obligation Halina could no longer simply talk around.
4. Retained an independent financial analyst to assess whether the venture position was consistent with prudent trust management under any reasonable reading of the authorization, producing an opinion that supported the family's position without relying solely on legal argument. An outside professional's assessment carried more weight in negotiation than the family's own view of the investment ever could on its own.
5. Sent formal notice to Halina outlining the breach and requesting an immediate freeze on any further discretionary changes to the trust's remaining investments, to stop additional losses while the dispute was resolved. Getting that freeze in place quickly stopped the bleeding while the accounting and settlement negotiations were still underway, rather than letting the recoverable amount keep shrinking in the meantime.
6. Opened settlement discussions grounded in the accounting and the analyst's opinion, rather than pursuing a courtroom fight over the ambiguous authorization language, since litigation risked years of delay while the position continued to lose value. Leading with documented facts rather than accusation gave both sides a basis to negotiate a real number instead of arguing indefinitely about what a single sentence in a form was meant to allow.
7. Negotiated Halina's resignation as trustee alongside the financial settlement, removing her from further control of the trust's assets regardless of how the dollar figure ultimately resolved. Separating her removal from the size of the payment meant the family did not have to accept a smaller settlement just to get her out of the trustee's seat, since the two questions were never allowed to be traded against each other.
8. Arranged for a professional corporate trustee to take over management going forward, with a conservative mandate matching the original trust document, so the family would not face this same exposure again. Moving to an institutional trustee, rather than another individual, gave the family a structure with its own internal compliance checks and reporting obligations, rather than relying on personal trust in one person's judgment alone.
9. Documented the higher standard applicable to a professional trustee as part of the settlement negotiation, since Halina's background as a licensed investment advisor meant her conduct could reasonably be measured against professional norms rather than a layperson's more forgiving standard. That higher benchmark strengthened the family's position considerably, since it meant Halina's own expertise worked against the argument that the investment was a reasonable, good-faith judgment call.
10. Reviewed the trust's insurance and professional liability coverage to confirm what portion of any settlement could realistically be funded that way, which shaped how much of the negotiation focused on Halina's personal assets versus her professional coverage. Knowing which pool of money was actually available made the eventual settlement figure realistic rather than a number the family could win on paper but never actually collect.

The outcome

Halina agreed to a settlement that returned a substantial portion of the loss to the trust, in the high six figures, funded partly from her own resources and partly from an insurance policy tied to her advisory practice. It was not the full amount the trust had lost. The broadened authorization Oksana had signed gave Halina enough of an argument that pursuing full recovery through litigation carried real risk, and the family, on our advice, chose a certain partial recovery over an uncertain full one that could have taken years and further legal cost to pursue.

The trust's remaining assets, worth a little over three million dollars after the settlement and the earlier loss, moved to a professional corporate trustee under a conservative mandate that matches what Oksana's father had originally intended. Oksana and Taras now receive regular, plain-language reporting rather than the vague reassurances that had characterized Halina's management, and any future change to the trust's investment approach requires their informed, documented consent.

Oksana said afterward that the hardest part was recognizing how much of the situation traced back to a single signature she had not read carefully. The settlement did not erase that loss, but it stopped it from getting worse, and it replaced an informal arrangement built on personal trust with a professional one built on accountability. For a family managing an inheritance meant to support two young children for years to come, containing the damage mattered more than winning an argument about exactly how much authority one form had granted.

Taras, drawing on his own career, took on a more active role reviewing the corporate trustee's quarterly reports once the transition was complete, though the actual investment decisions remained with the professional trustee rather than the family. Oksana said the change she noticed most was not the number on any statement but the fact that questions now got answered within days rather than weeks, and that every answer came with documentation behind it rather than reassurance alone.

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