Per California trust law, if a trustee has committed a breach of their fiduciary duty, the court can deem them personally liable for damages. The extent of liability, ultimately, depends on the severity of their offense and your situation.
Trustees may still be personally liable if the assets of the charity are not sufficient to meet the indemnity. Failure to deliver services under contract. Some liabilities can be limited through the wording of the “limitation of liability” provision in the contract.
A trustee must abide by the trust document and the California Probate Code. They are prohibited from using trust assets for personal gain and must act in the best interest of the beneficiaries. Trust assets are meant for the benefit of the trust beneficiaries and not for the personal use of the trustee.
Trustees are personally liable for all decisions they take in that capacity, and their liability is not automatically limited to the value of the trust fund. Typically, the trust deed will limit trustees' liability in some way and these clauses should be checked, as well as any existing trustee insurance.
Serving as the trustee of a trust instills a person with significant power. They have access to all the trust assets, but with a catch: They can only use those assets to carry out the instructions of the trust.
If the trustee is not paying beneficiaries accurately or on time, legal action can be taken against them.
This is a fundamental concept of trust law: the separation of legal and equitable title. In other words, while the trustee has the legal authority to manage and control the assets, they do so not for their own benefit, but for the beneficiaries.
Trustees can be held liable for the losses they cause to the trust they are administering. Typically, beneficiaries can recover assets of the trust that were distributed improperly if they can trace them. Problems may arise in recovering the assets if an innocent purchaser bought them for value.
Beneficiaries have a right to sue the trustee.
That is fairly easy under California law if there is no issue with the identity of the trustee. Next, you must establish a breach of that duty.
Examples of executor misconduct and trustee misconduct include: Failing to provide accountings to beneficiaries. Favoring one beneficiary over another. Misappropriating or misusing estate or trust assets for personal gain. Commingling personal assets with those of the estate or trust.
It defines the scope and extent of the trustee's liability to the noteholders; it also dictates whether the trustee will be entitled to claim indemnity from the issuer where the trustee has suffered a loss or other liability.
An executor does not possess the power to overrule or change the terms established by a trust; these roles carry separate responsibilities. An executor's role consists of overseeing and closing an estate as per its will's instructions without disrupting or interfering with their independent functions as trustee.
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. If they breach their fiduciary duties, they will be removed as the trustee and face a surcharge for compensatory damages.
Failing to properly invest trust funds, engaging in self-dealing, and preferring one beneficiary over the other beneficiaries are the more frequent ways a trustee mismanages a trust or breaches his or her fiduciary duty.
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.
Depending on the complexity of the case, it may cost anywhere from a few thousand dollars to $100,000 or more to dispute the terms of a trust.
Under California law, beneficiaries can sue a trustee. The initial step is confirming the trustee's identity. Subsequently, one must prove a breach of duty.
While a trustee may not legally withhold trust assets based on their own discretion, they may withhold assets if the power and discretion is afforded to them by the terms laid out in the trust document.
Assets will not be distributed until certain administrative tasks are carried out, including filing of tax returns, drafting of an accounting, and providing notice to all beneficiaries. Some or all of the assets will often not be distributed until expenses of the trust are paid.
The trustee is liable, at the option of the beneficiary, to purchase other land of equal value to be settled upon the like trust, or to be charged with the proceeds of the sale with interest.
Common examples of trustee misconduct include: Fraud. Not following the terms of the trust. Mismanaging trust assets (e.g., failing to diversify investments, neglecting property maintenance, or making inadvisable financial decisions that hurt the trust's value)