A trustee has an enormous responsibility, but they also have considerable authority. Unfortunately, trustees sometimes abuse their position for their gain in what is referred to as “self-dealing.” Self-dealing occurs when a trustee benefits from an action regarding the trust that is detrimental to beneficiaries, creating a conflict of interest. A self-dealing trustee can do considerable damage to a trust, which is why working with expert trust litigation attorneys is imperative to protect you and the trust. Read our guide on what to know when dealing with a self-dealing trustee in California:
What is a Self-Dealing Trustee?
A self-dealing trustee abuses their station intentionally or unintentionally to serve their interests over the beneficiaries’ best interests by benefiting from purchasing, using, or selling assets. Self-dealing is a criminal breach of fiduciary duty, so consulting expert trust litigation attorneys is crucial.
Under California Probate Code Section 16004, trustees cannot “use or deal with trust property for [their] own profit or any other purpose unconcerned with the trust,” and they cannot participate in a transaction wherein trustee and beneficiary interests conflict.
What Are Signs of a Self-Dealing Trustee?
Self-dealing can be obvious, but it is not always easy to detect. A self-dealing trustee often acts methodically to cover their tracks while benefiting from the trust they oversee. If you are unsure if your trustee is self-dealing, warning signs to be vigilant for include:
- Risky investments
- Investments that only benefit the trustee
- Abnormally high trustee fees
- Wasting trust funds
- Self-distribution (when a trustee is also a beneficiary)
- Taking loans from the trust
- Diverting funds from the trust account to personal accounts
- Buying assets for an unusually low price
- Modifying trust terms
- Stealing assets
- Receiving kickbacks or indirect income from their actions
Innumerable red flags exist that can reflect potential self-dealing, so speaking with trust litigation attorneys is essential to determine if a trustee is perpetrating this act.
How to Handle A Self-Dealing Trustee
If you are dealing with a self-dealing trustee, there are some steps we advise taking to effectively handle the situation. Trustees must account for their actions annually, and we advise carefully reviewing these records to identify evidence of this transgression.
Still, these transgressions are not always self-evident, so working with premier trust litigation attorneys is crucial. A trust litigation lawyer will demand more information, evaluate records, and help navigate the process from mediation to trial.
If found guilty, courts require the trustee to repay the losses incurred by the offense and will usually remove and replace the trustee.
Speak with Premier Trust Litigation Attorneys to Handle A Self-Dealing Trustee
Do you suspect that your trustee is self-dealing? Self-dealing is a severe offense that can have significant consequences on a trust, and contacting a trust litigation lawyer is crucial to identifying this abuse of power, protecting your trust, and recovering losses.
Fortunately, at Gokal Law Group, our team boasts unparalleled experience bringing these trustees to justice. Call us at (949) 753-9100, or contact us to schedule a consultation. We will exhaust every possible resource to guard your trust.