Depending on the situation, the court can rule in favor of suspending or removing and replacing the trustee, or they could even rule in favor of making the negligent trustee pay for damages, court costs, and legal fees.
Trustees found guilty of self-dealing or conflicts of interest can be held personally liable for resulting damages and may face removal from their position.
Trustees must follow the terms of the trust and are accountable to the beneficiaries for their actions. They may be held personally liable if they: Are found to be self-dealing, or using trust assets for their own benefit.
Under California trust law, trustees can be held personally liable for losses incurred due to a breach of trustee duties. Trustees have a legal obligation to act in the best interest of beneficiaries and the trust. This obligation is also known as their fiduciary duty.
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.
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.
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.
Generally speaking, once a trust becomes irrevocable, the trustee is entirely in control of the trust assets and the donor has no further rights to the assets and may not be a beneficiary or serve as a trustee.
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.
A trustee is tasked with managing the assets in a trust for the benefit of the trust's beneficiaries, and handling assets in the manner dictated by the terms of the trust. When a trustee fails in his or her duties, it is referred to as breach of fiduciary duty. Breach of fiduciary duty can come in many forms.
Time Frame For Suing An Estate
The California statute of limitations requires filing the lawsuit within 40 days from the defendant's death. Missing this timeline can affect the outcome of the case.
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.
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.
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.
A trustee is personally liable for obligations arising from ownership or control of trust property only if the trustee is personally at fault. 18002. A trustee is personally liable for torts committed in the course of administration of the trust only if the trustee is personally at fault.
While trustees may temporarily be able to delay trust distributions if a valid reason exists for them doing so, they are rarely entitled to hold trust assets indefinitely or refuse beneficiaries the gifts they were left through the trust.
Being a trustee is also a role that can be quite time consuming, more so than most people assume. Depending on the nature of the estate, being a trustee can require quite a few hours, which can be hard to come by if the trustee also has a full-time job, a family, and/or other obligations.
A common misunderstanding is that the trust owns the property within it. This is not really true. The trustee of the trust holds legal title to the trust property. The trust beneficiaries hold beneficial title to the trust property.
Suing the trustee if they have failed to competently do their job, breached their fiduciary duties, or caused harm to the trust is one of your most important rights as a trust beneficiary.
In order for the beneficiary to hold the trustee accountable, the beneficiary must have information about what the trustee is required to do and what the trustee actually does. Thus, the trustee has a duty to account and to inform.
Trustees may also misuse trust property for personal gain, such as using trust assets for personal expenses or investments, or embezzling these assets. This type of misuse is considered theft as it diverts trust resources for personal benefit, a clear violation of the trustee's fiduciary responsibilities.
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)
Who is Liable for Trust Debts? To begin, trustees are not personally responsible for the debts of a trust such as a mortgage on a trust property, outstanding loan from a promissory note or even medical and utility bills. You, as trustee, do not have to pay these bills personally.
Who Can Sue for Breach of Trust? California Probate Code §16420 states that any beneficiary or co-trustee can file a petition alleging breach of trust in the probate court.