Table of Contents
- Key Takeaways
- Can a Trustee Withhold Money From a Beneficiary
- Reasons a Trustee May Withhold Money
- Trustee Fiduciary Duties Under California Law
- Trustee Liability for Wrongfully Withholding Funds
- Related Resources
- FAQ
- How The Grossman Law Firm Can Help
Key Takeaways
- A California trustee cannot withhold money from a beneficiary.
- Trustees may withhold funds only if allowed by the trust document or if legally justified (e.g., disputes, conditions, suspected misuse).
- Beneficiaries’ Rights: Beneficiaries can take legal action if a trustee wrongfully withholds distributions.
- The Grossman Law Firm assists beneficiaries in enforcing their rights when trustees fail to act in a proper manner.
Can a Trustee Withhold Money From a Beneficiary
Trustees in California have a fiduciary duty to act in the best interests of beneficiaries. It includes the timely distribution of trust assets as directed by the trust.
The answer depends on the circumstances. A trustee may only hold distributions if the trust document or California law provides a valid reason. Arbitrary or unjustified withholding can be a breach of fiduciary duty and expose the trustee to liability.
At The Grossman Law Firm, Attorney Scott Grossman represents beneficiaries across California when disputes arise over delayed or withheld trust distributions.
Reasons a Trustee May Withhold Money
Under California Trust Law, a trustee may refuse funds from a beneficiary in certain situations, including:
- Non-compliance with trust terms: If the trust sets conditions (such as age, education, or milestones), distributions may be delayed until those conditions are met.
- Suspected misuse or fraud: Trustees can pause distributions if they have reason to believe funds are being misused.
- Pending disputes: If a legal dispute arises regarding the interpretation or enforcement of the trust, distributions may be withheld until the dispute is resolved through mediation, arbitration, or a probate court.
- Protecting other beneficiaries: In rare cases, a trustee may limit distributions to prevent harm to the trust or other beneficiaries.
However, the trustee must document and justify their decision. Failure to do so may lead to court intervention.
Beneficiary Rights: Trustee Fiduciary Duties Under California Law
Being a trustee entails a range of important duties and responsibilities. These duties are essential to ensure the proper administration of a trust and to protect the beneficiaries’ interests. Some of the critical duties of a trustee include:
- Duty to Not Delegate Tasks
- Duty not to become a Trustee of a second Trust if that second trust has some conflict with the First Trust
- Duty to administer the trust according to its terms
- Duty to account
- Duty to separate and identify Trust Property
- Duty to deal impartially with all Beneficiaries
- Duty to invest and manage Trust Assets
- Duty of compensation not impacting the Standard of Care
- Duty to use special skills
- Duty to diversify Trust assets
- Duty to Review Trust Assets
- Duty to adhere to a strict standard of care
- Duty to Manage Trust Property Productively
- Duty to Protect and Preserve Trust Property
- Duty to avoid conflict of interest
- Duty to Loyalty
- Co-Trustee’s Duties
- Duty not to demand a release of liability
- What is the Prudent Investor Rule?
- The Beneficiary’s right to get a copy of the trust
These duties require a trustee to act diligently, prudently, and in accordance with the terms of the trust. Failure to fulfill these duties can result in legal and financial consequences for the trustee.
Trustee Liability for Wrongfully Withholding Funds
A trustee may face legal consequences if they wrongfully withhold money from a beneficiary. Trustees have a fiduciary duty to act in the best interests of the beneficiaries, and withholding funds without a valid reason can constitute a breach of this duty. Beneficiaries have the right to take legal action against trustees who fail to distribute assets in accordance with the terms of the trust.
Trustees who withhold money without justification risk serious consequences:
- Court orders to release funds
- Personal liability for damages
- Possible removal as trustee
- Payment of the beneficiary’s attorney’s fees
If you are a beneficiary whose trustee refuses to distribute money, you have the right to petition the California probate court to compel distributions and enforce your inheritance rights.
Related Resources
- What Happens If a Trustee Does Not Follow the Trust?
- How to Get Your Trustee to Distribute Your Inheritance
- Tips for Determining the Damages for a Breach of Fiduciary Duties
- Can’t Afford a Probate or Trust Attorney?
FAQ
Q: Can a trustee hold distributions indefinitely?
A: No. Trustees must follow the trust’s terms and cannot hold funds without a valid legal reason.
Q: What can I do if my trustee refuses to give me money?
A: You can demand an accounting, request explanations in writing, and ultimately file a petition in probate court to enforce your rights.
Q: Can a trustee use withheld funds for their own purposes?
A: Absolutely not. Doing so would constitute a breach of fiduciary duty and provide grounds for the removal of the trustee.
Q: How long does a trustee have to distribute trust assets in California?
A: While there’s no fixed deadline, distributions should occur within a reasonable time (often 12–18 months). Long, unexplained delays may indicate misconduct.
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we assist beneficiaries and heirs throughout California in enforcing their rights in probate and trust litigation. If your trustee is wrongfully holding money or failing to carry out their fiduciary duties, we can step in to protect your inheritance.
Call (888) 443-6590 or fill out our Get Help Now form today.
Our Intake Specialists can evaluate your case at no cost to you to assess your situation. Qualifying cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.