Table of Contents
Understanding Trustee Misconduct
What Constitutes Trustee Misconduct?
Types of Trustee Misconduct
Signs a Trustee May Be Engaging in Misconduct
Legal Consequences of Trustee Misconduct
What to Do If You Suspect Trustee Misconduct
Related Resources
FAQ
How The Grossman Law Firm Can Help
Key Takeaways
- Trustee misconduct occurs when a trustee violates their fiduciary duties under California law.
- Common forms include self-dealing, mismanagement of trust assets, and failing to act in beneficiaries’ best interests.
- Beneficiaries can pursue court remedies such as removal, surcharge, and orders compelling proper administration.
- Attorney Scott Grossman and The Grossman Law Firm help beneficiaries throughout California uncover, prove, and remedy trustee misconduct.
Understanding Trustee Misconduct
Trustee misconduct happens when a trustee fails to follow California’s fiduciary standards and violates the duties imposed by the Probate Code. Because beneficiaries rely on the trustee to manage trust assets correctly, any misconduct can seriously damage the trust’s value, and a beneficiary’s inheritance.
At The Grossman Law Firm, we regularly work with beneficiaries who suspect their trustee is misbehaving and need clarity on their rights and next steps.
What Constitutes Trustee Misconduct?
Trustee misconduct includes any action or failure to act that breaches a trustee’s fiduciary duties. California trustees must comply with duties of loyalty, impartiality, prudence, and full disclosure. When they fall short, beneficiaries may suffer financial or informational harm.
Legal Obligations of a California Trustee
Under the California Probate Code, trustees must:
- Act solely in the beneficiaries’ best interests
- Follow the terms of the trust exactly
- Manage trust assets prudently
- Treat beneficiaries impartially
- Keep trust property separate
- Provide the required accounting and information
A trustee who does not meet these obligations may be committing misconduct.
Types of Trustee Misconduct
Trustee misconduct can take many forms, including:
Breach of Fiduciary Duty
This is the broadest category and includes:
- Misusing trust funds
- Failing to follow the trust instructions
- Neglecting required duties
- Poor asset management that reduces trust value
Self-Dealing and Conflicts of Interest
California law strictly prohibits trustees from benefiting personally from trust assets. Examples include:
- Selling trust property to themselves at a discount
- Using trust funds for personal expenses
- Steering trust business to companies they own
Mismanagement of Trust Assets
Trustees must manage property prudently. Mismanagement includes:
- Failing to diversify investments
- Ignoring property maintenance
- Making reckless or uninformed financial decisions
For a deeper breakdown of common violations, see: 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties.
Signs a Trustee May Be Engaging in Misconduct
Unexplained Financial Discrepancies
Missing funds, unexplained withdrawals, or sudden changes in financial reporting can indicate wrongdoing.
Lack of Transparency
Trustees must keep beneficiaries informed. Withholding information, delaying accounting, or avoiding questions is a red flag.
Ignoring Beneficiary Concerns
A trustee who refuses to address legitimate concerns may be trying to conceal mismanagement or misconduct.
Delays in Distributing Assets
While some delays are normal, unreasonable or unexplained delays can be a sign that something is wrong.
Legal Consequences of Trustee Misconduct
Surcharge (Damages)
The court can order the trustee to:
- Repay misused funds
- Restore lost value
- Cover improper expenses
Removal of Trustee
A trustee who breaches their duties can be removed and replaced by court order.
Criminal Consequences
Severe cases involving fraud or embezzlement may result in criminal prosecution.
What to Do If You Suspect Trustee Misconduct
Review Trust Documents and Records
Understanding what the trustee is required to do helps you identify where they have failed.
Gather Evidence
Records, emails, accountings, and witness statements can all help support your claims.
Communicate Concerns Directly
Sometimes misunderstandings can be resolved early. But if the trustee is evasive or dismissive, that is also a sign of potential misconduct.
Consider Mediation
In limited situations, mediation can help resolve disputes without immediate court involvement.
File a Petition With the Probate Court
Beneficiaries can file petitions requesting:
- Trustee removal
- Surcharge
- Compelled accountings
- Orders requiring proper administration
A knowledgeable trust litigation attorney can guide you through this process.
If you suspect your trustee isn’t acting in your best interest, don’t wait. Explore 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties to learn the most common warning signs—and what you can do about them.
Related Resources
- Overview of California Trust Litigation
- How to Get Your Trustee to Distribute Your Inheritance
- Know What You’re Getting Into: The Timeline of a Trust and Estate Lawsuit
- Can the Court Remove Your Trustee for Mishandling Assets?
- Can’t Afford a Probate or Trust Attorney?
FAQ
What is the most common form of trustee misconduct?
The most common form is breach of fiduciary duty, including mismanagement of trust assets and failure to follow the trust’s terms.
Can a trustee be personally liable for misconduct?
Yes. Trustees can be surcharged for financial losses and must repay money they misused.
Can a trustee be removed for misconduct?
Absolutely. California courts routinely remove trustees who violate their duties.
What if the trustee refuses to communicate?
A trustee who fails to provide information may be in violation of Probate Code §16060. Beneficiaries can petition the court to compel information or accountings.
Do I need an attorney to address trustee misconduct?
While not legally required, trust litigation is complex. Representation significantly improves your chances of securing remedies such as removal or surcharge.
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we help beneficiaries and heirs throughout California enforce their rights in probate and trust litigation. If you believe your trustee is engaging in misconduct, we can help you evaluate the situation, gather evidence, and take action to protect your inheritance.
Call (888) 443-6590 or fill out our Get Help Now form. Our Intake Specialists can evaluate your case to assess your situation at no cost to you. Qualifying cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Originally Published May 20, 2024