Trustees not only could be ordered to reimburse the trust for what they stole, but they may have to pay a hefty surcharge as well. They also could be removed from their role. Beneficiaries would also be affected by a trustee stealing from a trust, because it is their inheritances that the trustee is messing with.
A trust automatically terminates under California law when any of the following occurs: The term of the trust expires. The purpose of the trust is fulfilled. The purpose of the trust becomes unlawful.
Some of the most common reasons trusts are invalid include: Legal formalities were not followed when executing the trust instrument. The trust was created or modified through forgery or another type of fraud. The trust maker was not mentally competent when they created or modified the trust.
Trustee malfeasance refers to any type of negligent, self-serving, erroneous, or retaliatory conduct committed by the trustee of a trust resulting in harm to trust assets or beneficiaries. Trustee malfeasance is a broad term encompassing many different types of offenses, both intentional and unintentional.
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.
The court may decline to enforce your trust due to the following reasons: Evidence that demonstrates a lack of mental capacity while forming or making changes to the trust. Presence of coercion or undue influence while you were creating the trust. Signs of forgery or use of vague language.
The document creating the trust doesn't meet the legal requirements; The trust was created or modified by fraud; The creator of the trust lacked the capacity to create the trust; or. Someone exercised undue influence over the creator of the trust.
So, yes, you can sue a trustee for negligence. Trustees have a fiduciary duty to manage the trust prudently, act in the beneficiaries' best interests, and adhere to the trust document's terms. Examples of trustee negligence include: Mismanagement of trust assets, such as poor investment decisions.
Trust violations can range from serious misdeeds that constitute fraud (Business Week, 1992; Los Angeles Times, 1998; Santoro & Paine, 1993) to more common forms of trust violations, such as the use of deception in negotiations (Boles, Croson, & Murnighan, 2000; Carr, 1968; O'Connor & Carnevale, 1997; Schweitzer & ...
The answer to this question is generally no, although there are certain rare exceptions that could allow the trustee to remove or change a trust beneficiary, or withhold their distribution.
Dissolving an irrevocable trust can be a complex process, usually requiring consent from all beneficiaries, filing the necessary paperwork and potentially getting court approval. For instance, in states such as California, a petition to terminate the trust needs to be filed with the probate court.
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.
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.
Generally, no you cannot sue a trust directly. Again, that's because a trust is a legal entity, not a person. It's possible, however, to sue the trustee of a trust whether that trust is revocable or irrevocable. As mentioned, in the case of a creditor lawsuit the trustee of a revocable living trust could be sued.
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.
Negligence or Mismanagement of Trust Assets
So, if a trustee fails to do so, whether it is out of negligence, incompetence, or outright malice, then a trustee is unfit to manage the trust, and this constitutes a breach of his or her fiduciary duty and can be one reason for removing a trustee.
Any assets a trust doesn't include can be subject to the instructions in the will, meaning a will can override a trust if the trust does not specifically include certain assets. Assets not in the trust must pass through probate.
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.
Basic Requirements of a Trust
California statutes dictate a set criterion for valid trusts. Breaching any of the following can lead to the trust being deemed invalid: Intent. Mental capacity, meaning they should be legally sane and over 18.
Breach of trust in legal contexts refers to breaking the rules of a trust or a person taking advantage of property given to them for a period of time.
Intentionally defective refers to the fact that the grantor no longer owns the assets in the trust—they are removed from the estate—but still pays income taxes on any income earned from the assets in the trust.