Trust

Trustee Theft During Trust Administration

By February 24, 2026No Comments

Table of Contents

Key Takeaways

  • Under California law, the trustee has a legal duty to manage and protect trust assets.
  • A trustee has an obligation to the trust’s beneficiaries.
  • Trustee theft usually takes the form of excessive compensation, self-dealing, or hidden transactions.
  • The California Probate Code allows beneficiaries to pursue removal, surcharge, and other remedies.
  • As a result, acting quickly can help avoid additional loss of trust property.

The Trustee’s Role in Trust Administration

One of the main purposes of creating a trust document is to ensure that a person’s assets are properly managed after death. The trustee is charged with safeguarding assets, paying appropriate expenses, and distributing property to the intended beneficiaries in accordance with the trust terms.
Because trustees control the assets during administration, beneficiaries commonly rely on them for accurate reporting and honest management. Unfortunately, there are situations in which a trustee abuses their position and steals from the trust.
Under California law, trustees owe fiduciary duties of loyalty, prudence, and impartiality. If these duties are violated, beneficiaries may seek court intervention, including a surcharge, repayment of losses, suspension, or removal.
At The Grossman Law Firm, Attorney Scott Grossman regularly represents beneficiaries in trust litigation matters involving suspected misuse of trust assets.

8 Common Ways Trustees Steal From Trusts

Trustee theft often occurs gradually or through routine transactions.

Common Methods of Trustee Theft

  1. Excessive Trustee Compensation
    Trustee fees can sometimes be subjective. However, compensation must be reasonable under California law. Comparing fees charged by professional trust companies or banks can help determine whether the amount is excessive.
  2. Transferring Trust Assets Into Personal Name
    A trustee may improperly transfer assets from the trust’s name into his or her own name without authority under the trust document.
  3. Paying Trust Income to Themselves Without Permission
    Income generated by trust assets must be distributed in accordance with the trust terms. Taking income without authorization can constitute self-dealing.
  4. Executing Unauthorized Distributions of Principal
    Distributing principal to oneself without permission violates the duty of loyalty and may significantly reduce what other beneficiaries receive.
  5. Selling Trust Property to Themselves Below Fair Market Value
    A trustee may not purchase trust property at a discount for personal benefit unless expressly authorized and properly disclosed.
  6. Failing to Include Assets in the Accounting
    Omitting a trust asset from a formal accounting and retaining it personally is a serious breach of fiduciary duty.
  7. Improper Reimbursements
    Trustees are entitled to reimbursement for legitimate trust expenses. However, inappropriate or inflated reimbursements may signal misconduct.
  8. Misappropriating Assets Held for Safekeeping

Property delivered to the trustee for protection must remain trust property. Diverting those assets for personal use is unlawful.

Although each case is unique, secrecy, inconsistent reporting, or unexplained asset transfers often indicate potential problems.
Please contact an attorney specializing in trust and probate litigation.

What to Do If You Suspect Trustee Theft

Steps to Take If You Suspect Trustee Theft

If you suspect a trustee is stealing or mismanaging the trust, it is important to act quickly. Delay can result in additional loss of trust assets and make recovery more difficult.
Under the California Probate Code, beneficiaries may petition the court to:
  • Compel a formal accounting.
  • Suspend or remove the trustee.
  • Impose a surcharge requiring repayment of losses.
  • Recover improperly transferred property.
Prompt legal evaluation can also help preserve evidence and protect statutory deadlines.
As a result, trust disputes are rarely simple. However, beneficiaries do not have to manage the process alone. Early action can protect trust property and ensure accountability.
At The Grossman Law Firm, we have been helping clients across California for over 25 years. If you suspect your trustee of stealing from the trust, contact us today. We can help secure your inheritance.

FAQ

How can I tell if a trustee is actively stealing?

Common warning signs include missing assets, unexplained withdrawals, refusal to provide financial information, and transactions that benefit the trustee personally.

Can a trustee go to jail for stealing from a trust in California?

Serious misconduct may lead to civil liability and, in some cases, criminal consequences. Civil probate proceedings focus on recovering assets and compensating the trust.

How The Grossman Law Firm Can Help

If you suspect that a trustee is misusing or stealing trust assets, you should not wait. Protecting trust property often requires immediate legal action.
At The Grossman Law Firm, we help beneficiaries and heirs throughout California enforce their rights in probate and trust litigation.
Call (888) 443-6590 or fill out our Get Help Now form.
Our Intake Specialists can evaluate your case at no cost to you. Qualifying cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Originally Published February 6, 2018