What is a Conflict of Interest Between a Trustee and Beneficiary in California?

A trustee is responsible for preserving the integrity of a trust by fulfilling the wishes of the person who created it and safeguarding the interests of beneficiaries. Because of this, they have considerable power. It is an unfortunate fact that many trustees abuse their position and power for their gain, and these situations are where we often see a conflict of interest between a trustee and beneficiary in California. Thankfully, as a beneficiary, California trust law is on your side, and we can help enforce it.

At Gokal Law Group, we have dedicated years to successfully representing countless beneficiaries like you—victims of ill-intentioned trustees who used their power for their gain. 

What Constitutes a Conflict of Interest Between a Trustee and Beneficiary in California?

A conflict of interest is any situation in which a trustee’s interests or loyalties, including their relationships or debts, could impact decision-making and prevent them from acting in the best interests of the beneficiaries. 

More specifically, a conflict of interest arises for a trustee when their financial, professional, or other interests could seemingly influence their decision-making because it would undermine their ability to act in the beneficiaries’ best interests.  

When a conflict of interest arises, this is a breach of a trustee’s fiduciary duty and grounds for trust litigation. Probate law clearly states a trustee can never:

  • Use or deal with trust property for their profit
  • Use trust property for a purpose not related to the trust
  • Participate in transactions that oppose beneficiary interests
  • Commit self-dealing and use the trust for their gain
  • Enforce a claim against trust property they purchased after being appointed trustee  
  • Engage in a transaction with a trust beneficiary in which they gain an advantage

Trustees also have a duty of impartiality and must avoid creating an unfair advantage for specific beneficiaries, which is crucial in situations where a trustee is also a beneficiary.

Related Article: Trustee Duties in California: Avoiding Conflicts of Interest

What Are Examples of a Conflict of Interest Between a Trustee and Beneficiary in California?

There are countless examples of what constitutes a conflict of interest between a trustee and beneficiary in California. Common examples include when a trustee: 

  • Invests trust funds in their business or a related party’s business
  • Sells assets to themselves or related parties at an inflated or deflated price
  • Receives unreasonable or undisclosed commissions or fees
  • Fails to disclose potential conflicts of interest to beneficiaries
  • Favors one beneficiary over another without a valid reason 

If you feel a trustee has taken action that seems to be for their benefit as opposed to that of beneficiaries, acting quickly is critical. 

“A trustee has a legal obligation to avoid a conflict of interest, and this is a vital form of defense for both the beneficiary and the trust. Maybe a trustee has used trust funds to invest in their family’s business, loaned money to themselves, sold trust property to themselves below market value, or charged unreasonable compensation for their services. All of these constitute a conflict of interest and jeopardize the integrity of your trust and family legacy.” 

Mónica Reyes-Santiago, Associate Trust Litigation Lawyer, Gokal Law Group

If a trustee commits a breach of trust, you can work with a lawyer for the court to order them to pay back the money they mishandled, or you could have the court suspend their power and replace the trustee entirely to force them to relinquish control over the trust. 

Ultimately, the best way to determine if you have a case and your legal recourse is by working with a premier trust litigation lawyer

Related Article: California Trust Law: Can a Trustee Be Held Personally Liable?

Have You Been a Victim of a Conflict of Interest Between a Trustee and Beneficiary in California? Let Us Help You Enforce Your Rights! 

If you have found yourself in the middle of a conflict of interest between a trustee and beneficiary in California, contacting an attorney immediately to enforce your beneficiary rights is crucial to defending your inheritance and preserving the integrity of the trust. You have a limited window to pursue litigation, so time is of the essence.

Is an underhanded trustee compromising your inheritance and family’s legacy? Visit our Contact Us page to schedule a free consultation and work with premier attorneys to reverse the damage they have done! 


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