Finding out that someone entrusted with your financial well-being, or the future of a loved one’s legacy, has acted improperly can be a devastating blow to you and your family. When a fiduciary, a person or entity legally and ethically bound to act in your best interest, abuses that trust, the consequences can put everything you’ve worked for at risk. In California, this type of wrongdoing is often called fiduciary misconduct.
But how can you spot the warning signs before it’s too late, and what steps can you take to protect what’s rightfully yours? In this guide, we’ll explore the tell-tale signs of fiduciary misconduct in California and explain your options for taking action.
What is Fiduciary Misconduct in California?
Fiduciary misconduct occurs when a fiduciary fails to act in the best interests of the trust and its beneficiaries, violating their fiduciary duty in California. This duty involves a range of legal responsibilities, including filing accurate accountings, maintaining the property’s value, keeping beneficiaries informed, and remaining impartial when handling trust matters.
This type of wrongdoing is also referred to as a “fiduciary violation” or a “breach of fiduciary duty” in California. However, it can be hard to recognize, since those who commit these violations rarely do so openly. Next, we’ll explore the key warning signs that can help you spot fiduciary misconduct before it’s too late.
Related Article: What Are Examples of Executor Misconduct?
What Are 5 Common Signs of Fiduciary Misconduct in California?
Fiduciary misconduct often involves a betrayal of trust and the misuse of financial power. Spotting the warning signs early is critical to protecting your assets or inheritance.
Here are the five most common indicators that you may be dealing with fiduciary misconduct and why it’s important to contact an attorney promptly:
- Lack of Communication or Transparency: A fiduciary is legally required to keep beneficiaries reasonably informed. Avoiding questions, refusing to share financial statements, or giving vague or incomplete answers should immediately raise concerns.
- Self-Dealing or Conflict of Interest: This occurs when the fiduciary prioritizes their own financial interests over those of the beneficiaries. Examples include selling trust property to themselves or a close associate at below-market value.
- Failure to Provide an Accounting: Fiduciaries must maintain accurate records and provide regular accountings. Repeatedly missing deadlines or issuing reports that are incomplete, confusing, or misleading may indicate hidden activity.
- Commingling of Funds: Mixing estate or trust funds with personal money breaks the required financial separation and can make it easier to conceal misappropriation.
- Unusual or Excessive Compensation: While fiduciaries are entitled to reasonable compensation for their time and effort, sudden, unexplained, or disproportionately large payments to themselves or associated businesses are major red flags.
“Some of the types of fiduciary misconduct we’ve seen are trustees using the trust funds to pay for their Ferrari rentals or to pay for first-class tickets to Europe for their family and friends. When a fiduciary is using someone else’s money as if it’s their own, that is a tell-tale sign of fiduciary misconduct,” said Alison Gokal, a Partner at Gokal Law Group.
To better understand the concept of a fiduciary violation and when it’s time to work with an attorney, we are going to illustrate what this offense looks like with real-life examples.
More importantly, however, understand that if you are dealing with an unscrupulous fiduciary, a lawsuit and, often, hotly-contested litigation is incredibly likely to follow, so it is important to contact a firm like Gokal Law Group as soon as possible.
Related Article: What is Trustee Misconduct?
What is Fiduciary Misappropriation?
Fiduciary misappropriation in California occurs when a fiduciary unlawfully takes or diverts funds or assets for personal use or other unauthorized purposes. Examples include trustees using trust money to cover lavish personal expenses or treating the trust’s assets as their own.
The behaviors described above by Alison Gokal are clear examples of this type of misappropriation, highlighting the serious consequences of a fiduciary abusing their position.
Related Article: What is Misappropriation of Trust Assets by a Trustee?
What is Fiduciary Mismanagement?
Fiduciary mismanagement happens when a fiduciary handles assets or funds carelessly, negligently, or inefficiently, resulting in harm or loss to the beneficiaries.
Trustee or executor mismanagement can include making poor investment choices, failing to keep accurate records, or neglecting administrative duties that reduce the value of the trust.
Related Article: Can You Sue a Trustee for Negligence in California?
What Are Other Examples of Fiduciary Misconduct in California?
Beyond outright misappropriation, fiduciary misconduct can take several other forms. Conflicts of interest arise when a fiduciary’s personal interests clash with their duty to the beneficiaries, often resulting in self-dealing, where they personally benefit from transactions involving the trust.
Negligence, such as failing to properly manage trust assets or administer an estate, also constitutes a breach of duty. Other warning signs include failing to provide accurate accountings, commingling personal and trust funds, or committing outright fraud, such as forging documents.
As Alison Gokal emphasized earlier, the number one red flag is when a fiduciary treats the Trust assets and money as if it were their own.
Related Article: How Trust Litigation Attorneys Resolve Conflict with Self-Dealing Trustees
Can You Sue a Fiduciary in California?
Yes, in California, you can file a lawsuit against a fiduciary if they have breached their fiduciary duty. If you are considering suing for fiduciary misconduct, attorney assistance is imperative to ensure you have the best possible outcome and can preserve the integrity of the estate or trust that has been compromised.
Let Us Shield Your Inheritance from Fiduciary Misconduct and Reverse Whatever Damage They Have Caused
When a trusted individual violates their fiduciary duty, the emotional and financial impact can be overwhelming. At Gokal Law Group, we understand the stress and uncertainty this creates. With our proven experience in complex trust litigation, we are uniquely equipped to advocate fiercely on your behalf. Don’t let someone else’s misconduct jeopardize your future or diminish your family’s legacy.
Contact Gokal Law Group today for a consultation. We can provide the clarity, strategy, and fierce representation you need to reclaim what’s rightfully yours. Your peace of mind and the integrity of your inheritance are too important to leave to chance.
Disclaimer:
The information provided on this website does not, and is not intended to, constitute legal advice. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client relationship between the reader, user, or browser and Gokal Law Group, Inc. All information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
Readers of this website should contact an attorney to obtain advice with respect to any particular legal matter. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.