Trustees have a legal obligation to adhere to the terms of the trust and be accountable to its beneficiaries for their actions. This obligation, also called their fiduciary duty, is one of the most important legal tools at your disposal to hold them responsible.
A trustee is appointed by the grantor in the trust document and is legally bound to manage the trust in accordance with the terms of the trust and always act in the best interests of the grantor and beneficiaries.
Trustees have a fiduciary responsibility to the trust's beneficiary or beneficiaries. This means a trustee must act in the best interests of the beneficiaries to manage their assets.
If a trustee loses mental capacity, there may be express powers in the trust deed about the procedure for their removal or replacement. If there is no such power, the surviving trustees may be able to replace them under section 36(1) because they are incapable of acting.
The best chance you have to stop a trustee, to prevent that trustee from running away with the rest of the money, or losing the rest of the money is to get a court involved as soon as possible so that a court can put a freeze to those accounts, put a freeze to the trustee's actions, potentially remove the trustee out ...
The trustee must act solely in the interest of the beneficiaries, avoiding conflicts of interest and self-dealing. Any breach of this duty can result in personal liability.
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.
In essence, while both roles are powerful within their domains, trustees often have more enduring and autonomous control over the assets they manage.
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.
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.
The trustee generally has the authority to withdraw money from a trust to cover the cost of third-party professionals, as well as any other expenses arising as a result of administration.
Anyone 16 and over (18 for an Unincorporated Association or Charitable Trust) who is not 'disqualified' can be a Trustee. The reasons for disqualification were set down by the Charities Act 2011, and were designed to prevent people convicted of financial crimes, or who made serious financial errors, becoming trustees.
Breach of Fiduciary Duty
When trustees fail to follow the trust, they breach their fiduciary duty. This breach can have serious legal consequences.
Trustees generally do not have the power to change the beneficiary of a trust. The right to add and remove beneficiaries is a power reserved for the settlor of the trust; when the grantor dies, their trust will usually become irrevocable. In other words, their trust will not be able to be modified in any way.
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.
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.
It is not unusual for the successor trustee of a trust to also be a beneficiary of the same trust. This is because settlors often name trusted family members or friends to both manage their trust and inherit from it.
An executor has the authority from the probate court to manage the affairs of the estate. Executors can use the money in the estate in whatever way they determine best for the estate and for fulfilling the decedent's wishes.
If the trustee is not paying beneficiaries accurately or on time, legal action can be taken against them.
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 answer is a resounding yes. The ability to seek removal and replacement of a trustee is one of your most important rights as a trust beneficiary. And it may be the only option you have for ensuring you receive your rightful inheritance from a deceased loved one's trust.
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.
Whether a particular individual has standing to sue a trustee for a certain reason may vary by jurisdiction, but beneficiaries almost always have standing to sue. A large part of a trustee's responsibility is prudently investing the trust funds. Most state laws contain prudent investment standards for trustees.
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.