When someone is appointed the trustee of a trust, they receive considerable power over the funds, assets, and property it holds. In their role, they must follow the terms of the trust and act solely to benefit the beneficiaries and the trust. They could even be required to pursue litigation or defend the trust against a lawsuit. However, litigation may sometimes be unnecessary or may hurt the trust more than it helps, which also impacts your inheritance down the line. We are here to explain your rights if you are wondering, Can a trustee sue on behalf of a trust?
At Gokal Law Group, we have helped countless beneficiaries enforce their rights when trustees waste trust assets with unnecessary litigation. We have successfully recovered millions in settlements and trial verdicts for clients. Here’s what to know about a trustee’s right to sue on behalf of a trust.
Can a Trustee Sue on Behalf of a Trust?
Among the many powers a trustee has over the trust, it is essential to understand that a trustee has the power to pursue litigation on behalf of the trust to protect its interests. In some situations, a third party may be pursuing litigation against a trust.
This third party could be a beneficiary who feels that the trustee is mismanaging the trust or who wants to invalidate the trust. Alternatively, a trustee may consider pursuing litigation on behalf of the trust against a co-trustee for violating her fiduciary duty by mismanaging trust funds.
When someone sues a trust, the trustee usually has the power to use trust funds to defend against the lawsuit in the hope that they will recover the money through the litigation process. This is the case even if a beneficiary accuses the trustee of a breach of fiduciary duty.
However, there is one crucial exception: trustees cannot recover expenses incurred as a result of their own negligence or misconduct.
Still, as a beneficiary, it is important to understand some things about this. If a trustee has violated their fiduciary duty and engaged in misconduct or acted negligently and caused a lawsuit to occur, they may likely be denied reimbursement for legal fees. Moreover, they could also be held personally liable and required to pay damages.
Ultimately, this is why working with an attorney is so crucial. An attorney will have the expertise, experience, and resources to prove that if a trustee has engaged in misconduct then the trustee will be held accountable and will be prevented from draining trust funds.
Also, if a trustee specifically hires a friend or family member to represent them, this could signal a conflict of interest, which is also a breach of duty. For example, maybe they are paying the attorney well above market rates or doing them a favor by hiring them for unnecessary litigation.
Regardless, trust litigation can be costly for the trust itself. If you have any concerns about a trustee using trust funds for litigation, it is imperative to consult with an attorney to go over the trust terms. The trust document will provide guidance on how and when they can be reimbursed.
“Another important consideration for beneficiaries is that it constitutes a breach of fiduciary duty when a trustee wastes trust assets, meaning that if the trustee is needlessly pursuing trust litigation and costing the trust money, you can pursue litigation to recover the lost assets. No matter the reason, it is imperative to work with an attorney to determine the best course of action.”
– Nicholas D. Porrazzo, Partner, Gokal Law Group
Related Article: Who Pays Trust Dispute Legal Fees
Do You Want to Hold a Trustee Accountable for Wasting Trust Assets? Schedule a Consultation Today!
Whether a trustee is wasting trust assets on unnecessary litigation or attempting to use trust assets to defend themselves from disgruntled beneficiaries, working with a trust litigation attorney is crucial. A premier trust lawyer can review and interpret the complex terms of the trust and determine the best legal strategy for you to prevent the trustee from damaging the trust further.
By getting the representation you deserve at Gokal Law Group, you give yourself the best chance to succeed in court, ensure that they reimburse the trust, receive damages, and safeguard your inheritance. Visit our Contact Page to schedule a consultation.
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