When a trust breach occurs, a probate court can impose serious consequences and penalties, including suspension or removal as trustee or being surcharged – probate for being ordered to pay money – for damages caused by the breach. In rare and extreme cases, trustees can even face criminal charges.
Under California trust law, embezzling assets valued at $950 or less is a misdemeanor that can carry a 6-month county jail sentence.
Feelings of inadequacy, shame, and self-blame may arise, influencing how the person sees themselves. Other possible longer-term impacts of betrayal include the erosion of trust, not only in the specific relationship where the betrayal occurred but also in future relationships.
Terminating an irrevocable trust can have significant tax consequences, triggering a combination of income, capital gains and estate taxes. Hence, understanding these implications along with exploring alternative solutions is critical before deciding to dissolve a trust.
This is where things get tricky for irrevocable trusts. It's only possible to modify any irrevocable trust if the grantor and any beneficiaries collectively agree that: The trust needs to be modified or changed for some reason. The change or modification adheres to the original will or intent of the grantor.
Beneficiaries of a trust typically pay taxes on the distributions they receive from a trust's income. The trust doesn't pay the tax. Beneficiaries aren't subject to taxes on distributions from the trust's principal, however. The principal is the original sum of money that was placed into the trust.
Be willing to forgive and move forward
There are going to be times when someone breaks your trust and either they won't admit it or won't be willing to apologize for what they have done. As hard as it may be, you'll need to get to a point, eventually, where you are willing to forgive the person and move on.
Trusts offer amazing benefits, but they also come with potential downsides like loss of control, limited access to assets, costs, and recordkeeping difficulties.
breach of trust (noun as in disloyalty) Strongest matches. infidelity sedition treachery treason. Strong matches. apostasy deceitfulness disaffection double cross double-dealing faithlessness falseness falsity inconstancy perfidiousness perfidy violation.
Under California law, embezzling trust funds or property valued at $950 or less is a misdemeanor offense and is punishable by up to 6 months in county jail. If a trustee embezzles more than $950 from the trust, they can be charged with felony embezzlement, which carries a sentence of up to 3 years in jail.
When trustees fail to follow the trust, they breach their fiduciary duty. This breach can have serious legal consequences. Beneficiaries can file a lawsuit against the trustee, seeking to remove them and recover any losses incurred due to the trustee's actions.
Where the trustee commits a breach of trust, he is liable to make good the loss which the trust-property or the beneficiary has thereby sustained, unless the beneficiary has by fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion or undue ...
The most common penalty for a breach of fiduciary duty involves suspending or completely removing the trustee or executor, having them pay attorney fees and court costs, and having them return any stolen property. However, there can be more extensive and severe consequences.
A legal concept referred to as the “rule against perpetuities” prevents a trust from remaining active indefinitely. California law requires a trust to terminate within 90 years or no later than 21 years after the death of an individual alive at the time the trust was created.
To terminate an active trust, a party with standing must petition the court and provide evidence that persuades a judge to issue an order dissolving the trust or all beneficiaries of the trust must agree to its termination.
Consequences of Broken Trust and Breaches of Confidentiality
Personally, individuals may experience feelings of betrayal, anger, shame, and isolation. These emotional responses are not surprising given the level of vulnerability involved in sharing private information.
With a trust, there is no automatic judicial review. While this speeds up the process for beneficiaries, it also increases the risk of mismanagement. Trustees may not always act in the best interests of beneficiaries, and without court oversight, beneficiaries must take legal action if they suspect wrongdoing.
An irrevocable trust offers your assets the most protection from creditors and lawsuits. Assets in an irrevocable trust aren't considered personal property. This means they're not included when the IRS values your estate to determine if taxes are owed.
Trust can be destroyed through dishonesty, secrecy, lies, contempt and rejecting behaviours, both overt and covert. For example, lies about money, family background, addiction, or other hidden motives can diminish faith in a partner's reliability for a long-term commitment.
If not addressed, the long-term consequences of broken trust can be severe. The relationship might suffer from persistent insecurity and doubt, making it difficult for either party to fully commit or feel safe.
Give yourself permission to grieve the loss of trust and security. Journaling, talking with a therapist, or confiding in supportive friends can help process these difficult emotions. The goal isn't to wallow, but to move through the pain so you can eventually release it. Be sure to take care of your mental health.
In the event that an irrevocable non-grantor trust is terminated, the income that the assets have generated will presumably be distributed to the beneficiaries. It will be their responsibility to pay the taxes on the money.
Another key difference: While there is no federal inheritance tax, there is a federal estate tax. The federal estate tax generally applies to assets over $13.61 million in 2024 and $13.99 million in 2025, and the federal estate tax rate ranges from 18% to 40%.
If a trustee uses the funds from a trust account for their benefit, they will violate their fiduciary duty, resulting in severe consequences. Ultimately, trustees can only withdraw money from a trust account for specific expenses within certain limitations. Their duties require them to comply with the grantor's wishes.