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By: Scott Grossman on May 13th, 2024

What to Do if a Trustee Is Misappropriating From a Trust?

Dealing with the loss of a loved one or family member and the hardships and hold-ups of your trustee misappropriating from the trust can be some of the most confusing moments of your life. The uncertainty of not knowing where to start can make some of the most trying times even more frustrating.

With over twenty years of experience, The Grossman Law Firm has been a trusted guide for our clients, providing comprehensive knowledge about their rights and duties. No matter the situation’s complexity, we are committed to assisting you in obtaining a copy of the trust from your trustee. Our expertise in trust litigation, probate, and probate litigation ensures we will navigate the process with you. Here at The Grossman Law Firm wants to make the process as smooth and painless as possible.   

Is Your Trustee Misappropriating From a Trust?

When appointed as trustees of a trust, they are responsible for managing and safeguarding the trust assets for the benefit of the beneficiaries. That is a position of utmost trust and confidence. However, there are instances where a trustee may abuse their power and misappropriate assets from the trust. This breach of fiduciary duty is a serious offense and needs to be addressed promptly. The longer you wait, the longer your estate can be at risk. This article will discuss what you can do if your trustee misappropriates from a trust.

Misappropriation of trust funds

One common way a trustee may misappropriate a trust is by misusing the trust funds. 

Trust funds benefit the beneficiaries and fulfill the trust’s purposes. If a trustee uses the funds for personal expenses, investments, or other unauthorized purposes, they are breaching a fiduciary duty.

Gathering evidence to support your claim is essential if you suspect your trustee is misusing trust funds. Please make sure to record any suspicious transactions, withdrawals, or transfers made by the trustee. It may also be helpful to consult with an attorney specializing in trust and probate law. They may help guide you through the legal process.

Breach of trustee duties

When a trustee breaches their fiduciary duty, it’s important to remember that legal remedies are available to address the situation. Here are some common remedies:

  1. Removal of the trustee: If you believe a trustee is misappropriating from a trust, you can petition the court to remove them from their position. Removing a trustee is a legal process that involves presenting evidence of the trustee’s misconduct to the court. The court will consider the evidence presented and decide based on what is in the best interest of the beneficiaries. This process can be complex and lengthy, but it is a powerful tool to address trustee mismanagement.
  2. Accounting and restitution: If the misappropriation of assets has already occurred, the court may order the trustee to provide a detailed account of their actions. And make restitution for any losses suffered by the trust.
  3. Surcharge: In some cases, the court may impose a surcharge on the trustee, requiring them to personally reimburse the trust for any losses resulting from their misconduct. This means the trustee will have to repay the trust for the amount they misappropriated, which can be a significant financial burden.
  4. Legal action: In addition to the above remedies, beneficiaries may also choose to pursue a civil lawsuit against the trustee to recover damages caused by their breach of fiduciary duty. This can be lengthy and costly but can also lead to significant financial recovery for the trust and its beneficiaries.

It is important to note that the specific remedies available will vary depending on the jurisdiction and the facts of the case. Consulting with a trust and probate attorney specializing in these areas of law who can guide you through the legal process will help you understand your options and protect your interests.

Misappropriation of duties

A breach of fiduciary duty occurs when a trustee fails to act in the best interests of the beneficiaries. And instead prioritizes their interests. Regardless of the specific actions taken by the trustee, the breach of fiduciary duty is a serious offense that can have significant consequences.

If you suspect your trustee has breached their fiduciary duty, it is crucial to take action promptly. The longer the misconduct continues, the greater the potential harm to the trust and its beneficiaries. This can include financial loss, damage to the trust’s reputation, or even the dissolution of the trust. By gathering evidence, consulting with an attorney, and pursuing legal remedies, you can hold the trustee accountable. While also protecting the interests of the trust and its beneficiaries.

If you would like more information about trustee duties, check out our articles “Can a Trustee Withhold Money From a Beneficiary?”Breach of Fiduciary Duty” and “20 Ways Your Trustee Can be Breaching Their Fiduciary Duties” to understand the nuances of what a breaching fiduciary duty means.

Need more help?

It’s best to reach out as soon as possible. The longer you take, the more damage your trust could take. 

If you need help, have any more questions, or want to talk to someone about your case, please call us at (888) 443-6590. You can also fill out our Get Help Now form below, and we will be more than happy to see if we can assist you.