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Options when a trustee breaches their fiduciary duty

On Behalf of | Jun 7, 2023 | Estate Administration

The individual whom someone names to serve as a trustee is entrusted with a lot of authority over their legacy after they die. A trustee may make decisions about how to invest trust assets and when to liquidate them. They may also be in a position to determine how to distribute resources to the beneficiaries of the trust.

Someone serving as trustee has a fiduciary duty to the beneficiaries of the trust to act in their best interests and to make decisions that will help maximize the benefits they derive from the trust. They should also carefully adhere to the instructions regarding when and how to distribute trust resources to beneficiaries. When a trustee violates their fiduciary duty, the beneficiaries of the trust may need to take legal action to protect their interests. These are the two primary ways that beneficiaries can resolve allegations of a trustee who may be misusing their position.

Ask for their removal

The California probate courts theoretically have the authority to remove a trustee from their position when they engage in certain kinds of misconduct. Documentation that they have misappropriated resources or manage them incompetently could be enough to convince a judge that someone has not fulfilled their duties to the trust or its beneficiaries. Provided that a judge agrees that someone’s removal from their position is appropriate given their actions, it may be possible to have a different, more trustworthy trustee take over that role.

Prevent certain transactions or compel distributions

Occasionally, when the disagreement someone has with a trustee relates to a specific decision regarding trust assets, the probate courts can potentially compel distribution or prevent the use of trust assets for a specific purpose. The courts might block the sale of trust assets if it would potentially diminish the value of the trust and disadvantage beneficiaries. The courts could also potentially compel a trustee to follow through with distributions to beneficiaries that align with trust instructions if they have previously refused to distribute assets to a specific beneficiary.

Recognizing that seeking legal guidance and going to court may be necessary can help the beneficiaries of a trust fight back when the person tasked with administering the trust does not do their job well enough.