What is Family Trust Embezzlement?

By creating a family trust, you can protect your family – and your wealth – even when you are no longer around to do so yourself. A trustee’s responsibility is to ensure that he or she administers the family trust in the way the trustor intended. Unfortunately, some nefarious trustees abuse their position for their own gain and commit family trust embezzlement, which undermines the integrity of the family trust, and compromises the family’s inheritance.

For years, our team at Gokal Law Group has helped beneficiaries bring unscrupulous trustees to justice who embezzled from a family trust. Read our blog to learn more about this crime and when you need to work with a beneficiary rights lawyer.

What is Family Trust Embezzlement in California?

Trustees of a trust are charged with making responsible decisions when managing trust assets and cannot arbitrarily take trust funds for themselves. If this occurs, the trustee is committing a breach of their fiduciary duty to the trust and its beneficiaries under the Probate Code.

When it comes to family trusts, “embezzlement” refers to the misappropriation of trust assets, or assets that should have belonged in the trust, but were stolen before the trustor died. To prove embezzlement, one must establish that:

  • A fiduciary relationship existed between the trustee and beneficiaries
  • The defendant acquired assets through this relationship
  • The defendant intentionally took or used assets for their benefit
  • The owner of the property did not consent to its use

These are crucial elements to prove because what distinguishes “embezzlement” from “theft” is a breach of trust between the parties involved. Family trust embezzlement can lead to civil and criminal penalties, such as imprisonment, fines, restitution, and even trustee removal.

What Are Signs of Family Trust Embezzlement?

Several red flags could signal a trustee is committing family trust embezzlement. As soon as you suspect this is occurring, working with a California trust litigation lawyer as soon as possible is of the utmost importance. These signs include:

  • Unexplained or unauthorized transactions
  • A lack of communication or transparency
  • A sudden change in the trustee’s lifestyle or financial situation
  • A refusal to provide an accounting

“When this type of embezzlement occurs, we look for evidence that a trustee made transactions or payments that benefited themselves and did not benefit the beneficiaries. We recently worked on a case where a trustee also owned a contracting business, and when the home in the family trust needed repairs, the trustee hired his own company to perform the work and dramatically overcharged the trust. Even if the trust is paying for legitimate services, if a trustee charges rates that do not fit the bill, this constitutes embezzlement.”  

Anum Arshad, Trust Litigation Attorney in Orange County, Gokal Law Group

To catch these signs and determine if you need to work with a California trust litigation attorney, we encourage you to regularly review trust account statements and transactions, request copies of financial documents, and ask questions about discrepancies or concerns.

Need Help Navigating Family Trust Embezzlement? Work With the Best Trust Litigation Lawyers in Orange County!

Family trust embezzlement is a severe crime that can have far-reaching consequences on your family’s security and legacy, and it can take many different forms. As soon as you suspect a trustee is committing this egregious offense, it is crucial to contact a California trust lawyer to pursue litigation.

Visit our Contact Page and schedule a case evaluation to receive justice if a trustee has stolen from your family trust.

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