Can I pay his IOUs out of his trust fund?
I have recently set up a trust fund for my brother as my mother had specified in her will for me to manage after she passed away. He has outstanding bills and owes money to lawyers, family members, friends etc.... Some of these debts are accounted for by the people he owes as "IOUs" and are signed by him. My question is...Can I legally pay these people from his trust account with these informal IOUs? I had recently given him some of the money to pay these people because I was hesitant to do so myself...fearing it wasn't legal and I could be held accountable...but he didn't pay up and now I am being harassed because they know I have control of the funds. I feel like I need to seek legal assistance, but am reluctant to pay for counsel out of my own pocket...out of principle mainly, but understand that it may be necessary to protect myself and my family in the future...do I have a right to use his money to pay for this? Or am I entitled to receiving anything for managing these funds? Similar to how an executive of the estate would be entitled to a percentage of the funds they are managing?
Expert Answer
I understand your reluctance to incur expenses which, by the way, can be an expense of the trust and therefore paid from the principal. However, I think it would be a small amount of money well spent for you to sit down with a lawyer and precisely determine what protocols you need to follow in accordance with the terms of the Will that established the trust to comply with the law and the terms of the trust. That being said, an IOU is just another phrase for a promissory note which is a written evidence of a debt. However, even if there is no IOU, there may still be a debt. So long as the money is owed legitimately, regardless of the form of the IOU, it is probably an enforceable debt of your brothers. I urge you to contact a lawyer to evaluate each of the debts and to guide you as to future management of the funds.