Settlor Rights When a Trustee is in Breach of Trust
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When creating a trust, the settlor selects an individual, a group of individuals, or an entity to be the trustee. Trustees have many duties and obligations when it comes to their job of administering a trust. Unfortunately, some trustees fail to fulfill these responsibilities in the proper manner. When this happens, legal action may be necessary to protect the trust assets and the inheritance of the beneficiaries. The settlor of the trust has various rights that can be exercised if this occurs. These rights are in place to deal with trustees who are not acting in a reasonable and responsible manner. Keep on reading to learn more about settlor rights when there is a breach of trust by the trustee.
Three Options for Settlors When a Trustee Does Not Fulfill Duties:
What can the settlor of a trustee do if the trustee is not fulfilling his or her responsibilities? The following are three potential options:
- Relieve the trustee from some or all of his or her duties.
- Alter or deny any privilege or power that was conferred upon the trustee of the trust.
- Add additional duties, restrictions, or liabilities upon the trustee to those that are outlined by statute.
When a trustee does not act properly, it is important to take action quickly.
Settlor Rights when There is a Breach of Trust by the Trustee:
- First of all, consult with a knowledgeable trust litigation attorney who understands the rights of trust settlors.
- Additionally, carefully review the terms of the trust with regard to the settlor’s rights. The trust terms may dictate what steps should be taken when a trustee is not fulfilling his or her duties in a proper manner. They may also provide for certain remedies in order to swiftly remove or replace a trustee.
- Finally, review the terms of the trust with regard to trustee liability. Some trusts may be drafted so that the settlor can relieve the trustee of liability for breaches of his or her duties. If threatened action against the trustee is sufficient to resolve the issues at hand, the settlor may choose not to continue to pursue legal action.
Who else can Relieve a Trustee from Liability for Breach of Trust?
The settlor is not the only party with the ability to relieve a trustee from liability for breach of trust. Beneficiaries who are of full legal capacity, meaning they are of legal age and sound mind, can also relieve the trustee of his or her obligations. The beneficiaries can also relieve the trustee from liability if he or she neglected or violated duties. During legal proceedings, the court may also relieve the trustee of obligations through its own initiative.
While the terms of a trust may allow a settlor to choose not to hold a trustee liable for breaches of his or her duty, in some cases, the settlor does not have this ability. For example, if the trustee intentionally, with gross negligence, in bad faith, or with reckless indifference to the interests of a beneficiary breaches his or her duties, he or she cannot be relieved of liability.
If you are the settlor of a trust and have concerns about the trustee’s actions or failure to act, we are here to help. Learn more about how we have helped many previous clients by checking out our client testimonials. Do you have more questions regarding settlor rights when there is a breach of trust? Feel free to schedule a free over-the-phone 30 minute consultation through our quick and easy online form. It would be our pleasure to further assist you.