Trustee Not Acting in the Best Interest of Beneficiaries? Here’s What to Do

When a loved one establishes a trust, it’s a profound act of care intended to protect their legacy and provide for the people and causes they cherish. The individual appointed as trustee is entrusted with a legal duty to uphold those wishes and manage the assets responsibly. Yet, sometimes, this trust is betrayed. If you find yourself questioning a trustee’s actions, whether it’s due to mismanaged funds, delayed distributions, or a puzzling lack of communication, you are likely facing a breach of their fiduciary duty. It’s critical to understand your rights and the steps you can take if you have found yourself in a situation in which a trustee is not acting in the best interest of beneficiaries or the trust.

“A trust is supposed to protect a loved one’s legacy, ensuring their wishes are honored for those they care about,” said Anum Arshad, an Associate at Gokal Law Group who served as an Academic Fellow for Evidence at Chapman University Dale E. Fowler School of Law and received the CALI Award for the highest grade in Securities Regulations. She was also the Production Editor of the Nexus Journal of Law and Policy. “When a trustee isn’t upholding their end of the bargain, it’s important to understand that their job isn’t optional; it’s a legal obligation they assume upon accepting the role. You don’t have to tolerate silence, stalling, or secrecy. California law empowers beneficiaries like you, and we can help you leverage that power to set things right,” she said. 

Trustee Not Acting in the Best Interest of Beneficiaries in California? What to Do.

A trustee holds a powerful position, and with that power comes a serious legal obligation to act solely in the best interest of the trust and its beneficiaries. This is known as a fiduciary duty, a standard of care that requires loyalty, honesty, prudence, and transparency. 

When a trustee fails to meet this standard, this is known as a breach of fiduciary duty, and the consequences can be devastating, jeopardizing your rightful inheritance and creating immense emotional distress. Here is what to know to hold a trustee accountable for violating these duties.

Related Article: A Trust Attorney’s Guide: The Penalty for Breaching Fiduciary Duty

When a Trustee is Not Acting in the Best Interest of Beneficiaries.

The most immediate and painful impact of a trustee’s misconduct is often felt directly by you and other beneficiaries. When a trustee prioritizes their own agenda or simply neglects their duties, beneficiaries suffer financially and emotionally. 

Common indicators that a trustee is not acting in your best interest include:

• Misappropriation or Embezzlement of Trust Funds: This is a severe breach where the trustee uses trust assets for personal gain, mixes trust funds with their own, or outright steals from the trust.
• Unreasonable Delays or Withholding of Distributions: Beneficiaries are entitled to receive their inheritance according to the trust’s terms. A trustee who unreasonably delays payments or refuses to distribute assets without valid cause is likely breaching their duty.
• Lack of Communication and Transparency: Trustees have a duty to keep beneficiaries informed about the trust’s administration and to provide regular accountings. If a trustee is unresponsive, provides vague answers, or refuses to share financial records, it’s a significant red flag.
• Conflicts of Interest and Self-Dealing: A trustee must avoid any situation where their personal interests conflict with those of the trust or beneficiaries. Engaging in transactions that benefit themselves at the expense of the trust’s value is a clear breach.
• Favoring Certain Beneficiaries: Trustees are bound by a duty of impartiality, treating all beneficiaries fairly according to the terms of the trust. Favoring one beneficiary over others can constitute a breach.

Such situations are not just financial burdens; they are often deeply emotionally charged, especially when family members are involved. Beneficiaries feel frustrated, betrayed, and robbed of what was rightfully theirs. And with good reason. In these situations, working with a seasoned trust litigation attorney is crucial to safeguarding your rightful inheritance and enforcing your rights.

Related Article: Can a Trustee Go to Jail for Stealing from a Trust in California?

When a Trustee is Not Acting in the Best Interest of the Trust

Beyond directly harming beneficiaries, a trustee can also fail in their duties to the trust itself. While these actions might seem less direct, they inevitably diminish the trust’s value, ultimately affecting what you and other beneficiaries receive. Examples include:

• Negligent Management of Trust Assets: This can range from failing to prudently invest trust funds, making risky investments without proper research, or allowing valuable assets like real estate to fall into disrepair or lose value.
• Failure to Pay Trust Debts or Taxes: Neglecting the trust’s financial obligations can lead to penalties, liens, or even the forced sale of assets, eroding the trust’s value.
• Improper Record-Keeping: Poor or non-existent record-keeping can make it impossible to track assets, assess the trust’s financial health, and ensure proper administration.
• Disregard for the Trust Instrument: The trust document is the trustee’s governing guide. Ignoring its specific instructions or acting outside the scope of its authority can be detrimental to the trust’s integrity and purpose.

In these scenarios, the trustee’s actions undermine the very foundation of the trust, betraying the trustor’s intentions and ultimately costing beneficiaries their rightful inheritance.

What to Do When the Trustee is Not Acting in the Best Interest of Beneficiaries or the Trust

Discovering a trustee’s misconduct can feel overwhelming, but California law provides robust mechanisms for beneficiaries to protect their rights and hold trustees accountable and, in many cases, personally liable. Taking the following proactive steps is essential:

1. Educate Yourself on Fiduciary Duties and Beneficiary Rights: Understanding the trustee’s legal obligations (duty of loyalty, care, impartiality, to inform, and to account) and your entitlements as a beneficiary is your first line of defense. This knowledge empowers you to enforce your rights and identify potential breaches.
2. Thoroughly Review the Trust Document: This legal document is the definitive guide for the trustee’s actions and your rights. Examine it closely for specific provisions regarding distributions, asset management, trustee powers, and any instructions on how disputes should be handled.
3. Document All Misconduct and Breaches: Keep meticulous records of every instance where you suspect the trustee has failed in their duty – this evidence is key to proving a breach has occurred, and it’s also an area in which a trust litigation attorney can be a substantial help. This includes dates, specific actions or inactions, relevant financial documents, and all communications (emails, letters, phone call summaries) with the trustee or their representatives.
4. Communicate Your Concerns Directly and Formally: Sometimes, issues stem from misunderstandings or simple oversight as opposed to intentional wrongdoing. A formal written letter, preferably from an attorney, detailing your concerns and requesting specific information or actions (e.g., an accounting) can often resolve matters without escalation. This also serves as important documentation for future legal action.
5. Explore Alternative Dispute Resolution (ADR): If direct communication doesn’t yield results, consider ADR options such as mediation or arbitration. In mediation, a neutral third party facilitates discussions to help both sides reach a mutually agreeable solution. In arbitration, a neutral third party hears the arguments and makes a binding decision. These methods can often be quicker and less costly than traditional litigation.
6. Petition for Trustee Removal: If the trustee’s misconduct is severe, persistent, or they are clearly unfit to serve, beneficiaries can file a petition with the probate court to have them removed. The court can then appoint a suitable replacement to protect the trust’s assets and ensure proper administration.
7. Seek Recovery of Losses and Surcharges: For financial damages caused by a trustee’s breach of duty, the court can compel the trustee to reimburse the trust for losses. This legal remedy, known as a surcharge, holds trustees personally liable for the financial harm resulting from their misconduct. 
8. Engage Experienced Legal Counsel Early On: The complexities of trust litigation demand specialized expertise. An experienced attorney can provide expert advice, help gather necessary evidence, navigate legal proceedings, and represent your interests to protect your inheritance and ensure the trustee’s accountability.

“Navigating a trust dispute, especially when it involves family, is incredibly challenging and emotionally charged,” said Arshad. “It often arises in the aftermath of a profound loss, forcing you into legal action at a time of grief. Our collaborative team is uniquely equipped to handle these complex cases. We understand the nuances of trust law and the deeply personal nature of these conflicts. We are ready, willing, and able to fight fiercely for your rights while always seeking the most strategic and value-driven path to resolution for you, our client,” she said.

Trustee Not Acting in Your Best Interest? Protect Your Inheritance with Trust Litigation Attorneys.

When a trustee is not acting in the best interest of you or the trust, your family’s legacy and your rightful inheritance are at stake; you need more than just legal representation; you need fierce advocates who are also compassionate and strategic. 

At Gokal Law Group, we are Orange County’s premier estate and trust litigation firm, renowned for our deep knowledge of probate and trust law and our proven track record of success. We are motivated by a fierce devotion to our clients, who are often navigating the trauma of loss while forced into legal action against those they once trusted. 

Don’t stay silent when a trustee puts their interests above yours. Contact Gokal Law Group today to ensure your loved one’s wishes are honored, and your inheritance is protected.

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