Issue with Trustee

I hoping for some guidance (and to blow off some steam).

My Wife & Father-in-Law were the beneficiaries to irrevocable trust funds left to them by my Wife's Great Aunt. The Trustee is Old National Bank out of Indiana and they are the worst. between 1999 and 2005 they averaged a 2.5% return before fees of 1%. My Father in Law passed away in 2005 and things have gotten worse since. We asked to have it converted to a total return trust with a yearly 4% payout. They withdrew $2700 dollars in the the 1st quarter of 2006 for lawyers fees. I had to fight with them to find out they had hired a outside law firm handle the conversion that was never disclosed to us. Then a another charge in the 2nd quarter of 06 of $3800. They tell me is was a Capital Gains Tax due to converting it from one beneficary to another(waiting to hear from my CPA on this BS).

I'm wondering is it's worth taking these people to court. The Trust is now losing money and I'm losing it. I could stick this money in a CD and make more then these clowns. Any advice would be appreciated!

I'd ask your CPA for the name of a good lawyer who's familiar with laws concerning trusts. This sounds pretty complicated and it's worth whatever they charge for an hour of time to find out if you have a case or not. If it's available, they'll probably want to see the documents setting up the trust, and copies of the statements.

But, on the surface, it sounds like they did a bad job.

I will be consulting my CPA when he returns from vacation. But does it look like the Trustee has breached a fudiciary responsibility? We also found out about a outside fee to a lawyer paid by the trust that we were never told about? Does the trusteee have a responsibilty to disclose this info to a beneficary?

Sorry, but I'm not a lawyer and don't know the terms of the trust so I can't answer your specific questions. The terms of the trust, for example, may give them broad powers to hire an attorney at their discretion.

Still, it doesn't make sense to me that they were losing money over the last 3 years, which have been really good for the market. Even this year, which has not been great, the account ought to have a positive year-to-date return. And the 1.5% annual return (after expenses) from 1999-2005 is pitiful. There were some bad years in there, but some good ones, too. But whether they were incompetent depends on what they were supposed to do (invest only in bonds? diversified portfolio? anything they wanted including rare coins?) and how well they did within those categories.