Table of Contents
When a California Trustee Becomes Personally Liable
Five Costs a Trustee May Owe After a California Surcharge
Why Legal Representation Matters in a Surcharge Petition
How The Grossman Law Firm Can Help
Key Takeaways
- A surcharge holds a trustee personally liable for losses caused by negligence, misconduct, or mismanagement.
- California beneficiaries can petition the probate court to recover trust funds that have been stolen, lost, or misallocated.
- Trustees may be liable for damages, fees, costs, and interest resulting from their breach of fiduciary duty.
- Working with an experienced trust litigation attorney increases the likelihood of recovering losses.
- The Grossman Law Firm represents beneficiaries statewide in surcharge actions and trustee removal cases.
When a trustee fails to perform their duties responsibly, beneficiaries have the right to hold that trustee financially accountable. At The Grossman Law Firm, we represent beneficiaries throughout California whose trusts have suffered losses due to negligence, mismanagement, or misconduct. One powerful remedy available under California law is a surcharge, a court order requiring the trustee to repay the trust for the harm they caused.
What Is a Trustee Surcharge?
A trustee surcharge is a court-ordered financial penalty imposed on a trustee who breaches their fiduciary duties. When a trustee’s actions, whether careless, reckless, or intentional, cause a loss to the trust, the trustee can be held personally liable to restore those assets.
A surcharge may be appropriate when a trustee:
- Mismanages trust investments
- Fails to safeguard trust property
- Steals or misuses trust funds
- Makes improper distributions
- Fails to follow the trust terms
- Ignores California Probate Code requirements
This remedy protects beneficiaries and restores the trust to its original state. To learn more about common breaches of trustee duties, read our article “20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties.“
When a California Trustee Becomes Personally Liable
California Probate Code imposes strict duties on trustees, and violating those duties can result in significant financial consequences. A surcharge action is supported when the trustee’s conduct results in any measurable loss, including:
- Diminished asset value
- Missing funds
- Increased taxes, fees, or penalties
- Lost investment opportunities
- Unauthorized or improper expenses
Beneficiaries do not have to tolerate negligence or misconduct. When your trustee’s actions have cost the trust money, the probate court has the authority to order repayment.
Five Costs a Trustee May Owe After a California Surcharge
The trustee becomes personally responsible for the following if the probate court finds a breach of fiduciary duty:
1. Trust Funds Lost Due to Negligence
That includes losses caused by poor investment decisions, failure to diversify, ignoring market risk, or failing to safeguard trust property.
2. Stolen or Misappropriated Trust Funds
Suppose the trustee used trust assets for their own personal benefit or failed to prevent theft. In that case, the trustee can be surcharged for the entire amount.
3. Misallocated or Improperly Distributed Funds
Trustees who distribute assets contrary to the trust terms or out of priority may be ordered to reimburse the trust.
4. Improper Fees, Expenses, or Charges
Any unauthorized payments, excessive fees, or expenses that do not benefit the trust can trigger personal liability.
5. Interest or Appreciation the Trust Would Have Earned
Courts may award interest based on what the trust should have gained if the trustee had acted prudently. This is designed to compensate beneficiaries for lost growth, not just the original loss.
Why Legal Representation Matters in a Surcharge Petition
A surcharge petition requires:
- Detailed financial analysis
- Proof of loss
- Evidence of breach
- Understanding of California trust law
- Precise identification of damages
Most beneficiaries cannot achieve this outcome on their own. California courts expect a well-supported petition, and trustees often fight these claims aggressively. Working with a trust litigation attorney ensures your petition is properly prepared and supported with evidence.
At The Grossman Law Firm, we regularly file surcharge petitions, seek trustee removal, and recover losses caused by negligent or dishonest trustees.
Related Resources
- Overview of California Trust Litigation
- Removing a Trustee
- Irrevocable Trust Beneficiary Rights in California
- Duties of a Trustee of an Irrevocable Trust
- Trustee Duties: Understanding the Trustee Standard of Care
- Can’t Afford a Probate or Trust Attorney?
FAQ
What is a surcharge against a trustee?
A surcharge is a court order that requires a trustee to repay the trust for losses caused by negligence, misconduct, or a violation of fiduciary duties.
When a California Trustee Becomes Personally Liable?
Yes. If a trustee breaches their duties under the Probate Code, the court may require them to reimburse the trust personally.
How do beneficiaries prove damages?
Beneficiaries must show that the trust suffered a financial loss. It often requires reviewing accountings, bank statements, trust records, and investment reports.
Do I need an attorney to file a surcharge petition?
While not legally required, surcharge petitions are complex. An experienced trust litigation attorney significantly increases the likelihood of recovering trust losses.
Can I remove a trustee while also seeking a surcharge?
Yes. Beneficiaries can request both trustee removal and a surcharge in the same petition.
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we assist beneficiaries and heirs throughout California in enforcing their rights and protecting their inheritance.
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 matters will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Originally Published August 28, 2016