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By: Scott Grossman on September 15th, 2016

Fiduciary Surcharge Can Be Ordered Against Trustees

When a fiduciary breaches his or her duty, there are several remedies that a judge can impose in order to protect the beneficiaries of a California trust. One such remedy is referred to as a “fiduciary surcharge.” Essentially, any action that makes it necessary to return trust assets to the condition that they were in prior to the breach can result in such a remedy.

What is a fiduciary surcharge? The following is an overview:

  • A surcharge requires a fiduciary to pay money to the trust or estate.
  • A surcharge often results from items in a trust or estate accounting.
  • A surcharge can be based on fees, expenses, or expenditures that are disallowed by the court or that were improperly made.
  • A surcharge can also result from financial losses.
  • If the trustee or other fiduciary has no direct interest in the trust property, he or she will have to pay the surcharge with personal funds. This can amount to more than the trustee is given as compensation for serving as fiduciary.
  • Beneficiaries can request interest as part of the surcharge based upon appreciation that would have otherwise accrued.

A surcharge is one of several available options that beneficiaries can pursue when the trustee of a trust breaches his or her duty.

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