A trustee is given significant responsibility over trust assets, but that authority comes with legal obligations. Trustees are expected to follow the terms of the trust, protect its property, and act in the interests of the beneficiaries.
Unfortunately, that does not always happen.
A trustee may misuse trust funds, withhold information, favor certain beneficiaries, or make decisions that benefit themselves. When that happens, a beneficiary does not simply have to accept it. California law provides ways to challenge trustee misconduct and, when necessary, ask the court to intervene.
Signs a Trustee May Be Taking Advantage of a Beneficiary
Not every disagreement with a trustee means they have done something wrong. Trustees often have discretion when managing property and making certain decisions.
However, some conduct deserves a closer look. Warning signs can include:
- Using trust money or property for personal expenses
- Refusing to provide information about trust assets
- Failing to provide required accountings
- Making unexplained withdrawals or transfers
- Paying themselves excessive trustee fees
- Improperly favoring one beneficiary over another
- Delaying distributions without a clear reason
- Selling trust property to themselves or someone close to them
- Allowing valuable trust property to fall into neglect
One questionable decision may have an explanation. A pattern of secrecy, missing money, or self-serving transactions can point to a much larger problem.
What Duties Does a Trustee Owe to a Beneficiary in California?
A trustee is a fiduciary. This means they are legally responsible for managing the trust according to its terms and fulfilling the duties California law places on trustees.
Among other responsibilities, trustees generally have duties involving loyalty, prudent administration, protection of trust property, and providing beneficiaries with certain information.
A trustee cannot simply treat trust property as their own. Using the position for personal gain or placing personal interests ahead of the trust may amount to a breach of fiduciary duty in California.
What Should You Do if You Suspect Trustee Misconduct?
If something does not look right, start by gathering information. Acting on suspicion alone can make an already difficult family or financial dispute more complicated.
Review the trust documents. The trust itself can help clarify what the trustee is allowed to do, when distributions should occur, and how certain property should be handled.
Request information and an accounting. Trust records can provide a clearer picture of where money has gone, what assets remain, and whether questionable transactions have taken place.
Keep records of concerning conduct. Save emails, letters, financial statements, property records, notices, and other documents connected to the trustee’s actions.
Talk with a trust litigation attorney. If assets appear to be missing, the trustee refuses to cooperate, or questionable transactions are continuing, it may be time to consider legal action. An experienced trust litigation attorney can review the situation and determine which remedies may be available.
Can You Remove a Trustee Who Is Abusing Their Position?
In some situations, yes. California courts have several ways to address a breach of trust. Depending on the circumstances, a court may order the trustee to perform certain duties, stop a questionable transaction, provide an accounting, or address financial harm caused to the trust.
More serious misconduct may support a request to remove the trustee and appoint someone else.
Removal is not automatic simply because a beneficiary and trustee disagree. The facts matter. Evidence of self-dealing, serious mismanagement, dishonesty, or other breaches can make court intervention more appropriate.
Can a Trustee Be Forced to Pay Back the Trust?
Potentially. If a trustee improperly takes money or causes the trust to suffer a financial loss, they may be held personally responsible for that harm. Depending on the circumstances, legal action may seek to recover improperly transferred assets or require the trustee to compensate the trust for losses caused by a breach.
This can become especially important when a trustee has transferred money or property to themselves or used trust funds for expenses that had nothing to do with administering the trust.
What if the Trustee Is Also a Beneficiary?
It is possible for the same person to serve as both a trustee and a beneficiary. That arrangement is not automatically improper.
The problem arises when the trustee uses their control over the trust to unfairly benefit themselves.
For example, a trustee-beneficiary might make distributions to themselves while withholding distributions from other beneficiaries, or structure a transaction in a way that benefits their personal interests.
Our guide on whether a trustee can also be a beneficiary in California explains this situation in more detail.
When Should a Beneficiary Consider Legal Action?
Some trustee disputes can be resolved by requesting information, reviewing an accounting, or addressing misunderstandings about the trust. Others cannot.
It may be time to speak with an attorney when trust money or property is disappearing, records are being withheld, distributions are repeatedly delayed, or the trustee appears to be putting their own financial interests first.
Timing can also matter. If a questionable sale, transfer, or distribution is about to happen, waiting may make the situation more difficult to correct later.
Protecting Your Rights as a Trust Beneficiary
Trustees are given substantial authority, but beneficiaries have rights too.
If you believe a trustee is misusing trust property, withholding information, engaging in self-dealing, or otherwise violating their duties, Stone & Sallus can help you understand your options.
Our attorneys handle trust and probate disputes involving trustee misconduct, breach of fiduciary duty, improper distributions, mismanagement, and other conflicts between trustees and beneficiaries. Contact Stone & Sallus to discuss your situation and the steps that may be available to protect your interests.
