Imagine you are the beneficiary of a trust that has been created to ensure your financial security, but as the trustee manages it, you notice that they seem to be profiting from their role at your expense. It doesn’t take long for a sickening suspicion to enter your mind: Are they lining their own pockets instead of fulfilling their duties?
Unfortunately, for many beneficiaries, understanding the gravity of this situation takes little to no imagination at all because this is all too common. This isn’t just paranoia and could very well constitute self-dealing. If you suspect a trustee is engaging in this behavior, acting quickly is crucial. To better illustrate what this abuse of power looks like, let’s look at examples of trustee self-dealing.
What Is Self-Dealing?
Trustee self-dealing occurs when a trustee enters a transaction against their fiduciary duty of loyalty and their fiduciary duty to act in the best interests of the trust and beneficiaries. This constitutes a conflict of interest. This breach of fiduciary duty can lead to litigation, penalties, or their removal.
Self-dealing can take many forms, but it generally involves the trustee benefiting or attempting to benefit from a transaction they make in their role as a trustee. A trustee cannot personally benefit from transactions made with trust assets and exploit the trust for personal gain.
Self-dealing can have enormous consequences on the trust and the inheritance you stand to gain, so it is essential to take this matter seriously. As soon as you suspect a trustee is self-dealing, remember that you are not alone. Contacting a trust litigation attorney is imperative to hold a trustee accountable and ensure your rights are protected.
Still, to better illustrate this egregious breach of their fiduciary duty, let’s explore some examples of trustee self-dealing.
“Trustees should operate by a simple rule: they should never let their personal interests influence any decision about managing trust funds. Still, it’s important to work with an attorney so they can evaluate your case. For example, in situations where the trustee is also a beneficiary, benefitting from a transaction does not inherently mean they have engaged in self-dealing. For it to qualify as self-dealing, they must have benefitted more than other beneficiaries. These situations can be complex, so expert guidance is crucial.”
– Anum Arshad, Associate, Gokal Law Group
Related Article: How Trust Litigation Attorneys Resolve Conflict with Self-Dealing Trustees
What Are Examples of Trustee Self-Dealing?
Many examples of trustee self-dealing revolve around situations that involve a trustee benefiting from the sale or purchase of trust assets, either directly or indirectly. Common examples in which a trustee engages in self-dealing include when a trustee:
- Gives gifts to themselves from the trusts
- Loans themselves money from the trust
- Receives indirect income from any party they pay with trust funds
- Uses a third-party or separate account to move funds to personal accounts
- Sells trust assets to themselves from the trust
- Buys assets or property from themselves for the trust
- Charges excessive trustee fees
- Makes risky or ill-advised investments that benefit themselves
As you can see, self-dealing can take countless forms, making it crucial to work with an attorney as soon as you suspect this has occurred.
An attorney can assist you in holding the trustee accountable, removing and replacing the trustee, and, in more severe instances, holding the trustee personally liable. Remember, you have the power to take action and protect your rights.
Related Article: How Do You Prove a Breach of Fiduciary Duty?
Do You Need to Hold aTrustee Accountable Who Is Exhibiting Examples of Self-Dealing? Contact Gokal Law Group.
If any of the above examples of trustee self-dealing sound familiar, don’t silently watch them abuse their station, compromise your inheritance, and undermine the integrity of the trust. The financial security you deserve is at stake. Unexplained activity, suspicious investments, or a lavish lifestyle funded by the trust can all be signs of self-dealing. Luckily, at Gokal Law Group, we are here to fight for you. We can investigate your situation, gather evidence, recover squandered assets, and hold the trust accountable as we guide you through the legal process.
Schedule a consultation to safeguard your inheritance and future.
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