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By: Scott Grossman on August 27th, 2016

Beneficiaries Can Take Legal Action When A Trustee Breaches A Duty

Serving as the trustee of a trust comes with a great deal of responsibility. Trustees have various duties to the trust and the beneficiaries as outlined by law. When a trustee breaches one of these duties, the beneficiaries may seek legal action. In some cases, the trustees can even be sued personally in a civil lawsuit. It is important for beneficiaries to understand their rights when a trustee commits a breach during trust administration in order to ensure that the intentions of the settlor of the trust are ultimately carried out. Without exercising these rights, the trustee’s actions could result in irreparable damage to the trust assets and the beneficiary’s inheritance.

Potential Remedies to Beneficiaries of Trustee Breaches

What can a beneficiary do if a trustee breaches his or her duties during trust administration? There are various options available. The beneficiary can pursue legal action through the court system in order to accomplish the following:

  1. Compel the trustee to perform his or her duties.
  2. Enjoin the trustee from committing the breach of his or her duties you anticipate occurring.
  3. Compel the trustee to “fix” the breach that has already occurred by paying a certain amount of money.
  4. Request the appointment of a receiver or temporary trustee over the trust.
  5. Remove the trustee.
  6. Set aside the actions of the trustee that you find objectionable.
  7. Reduce the trustee’s compensation.
  8. Trace and recover the trust property that was wrongfully distributed.
  9. Sue the trustee in a civil action.

The best remedy for a matter depends on the particular breach that has occurred. In some cases, the remedy may be as simple as getting a court order to force the trustee to carry out one of his or her responsibilities. In other cases, more drastic measures may be called for, including the removal of the trustee.

How Damages Are Calculated In an Action Against a Trustee

When a beneficiary opts to sue a trustee in a civil action, the court will determine whether the beneficiary succeeds in his or her claim. If the beneficiary wins, damages must be calculated. Generally, damages for breach of trust by a trustee will amount to the greater of the following:

  1. The amount required to restore the value of the trust property and trust distributions to what they should have been if the breach had not occurred.
  2. The profit that the trustee made as a result of the breach.

In some cases, the beneficiaries of the trust may recover the full amount of damage to the trust. In other cases, the damages may be limited to only that portion of the increase in value to the trust that resulted from the trustee’s breach.

Understanding your rights as the beneficiary of a trust is crucial in order to ensure that you receive your full inheritance. Many beneficiaries make the mistake of not paying close attention to the trust administration process. Unfortunately, this can lead to a lack of oversight with regard to the trustee’s actions. If the trustee is making mistakes, failing to fulfill his or her duties, or acting in a dishonest manner, the beneficiary may need to step in and take swift legal action. Fortunately, beneficiaries are entitled to seek legal representation in order to pursue litigation against a trustee.

If you are ready to start your case, then please give us a call or fill out our Get Help Now form. A comprehensive overview of California Probate is available here. Should you have additional questions about trust litigation, you will find plenty of useful information in our Learning Center.