California Trustee Defense for Financial Abuse Allegations

Legal Standing of Trustees in the United States

Every state in America has a set of regulations regarding the responsibilities and legal position of trustees. These fiduciaries are designed to protect the trust and the potential beneficiaries from possible losses. The first duty of a trustee is to be completely transparent and honest during their duties.

Trustees must disclose all the pertinent material details regarding any managerial transactions they undertake.

In most cases, you’ll find that the accounts must be handed over for inspection after a set period, with most parties choosing to examine their books every financial quarter, every year, or every six months. The final decision rests with the person who establishes the trust.

One good result of keeping things transparent in this way is allowing everyone involved to dispute or block any transactions they might disagree with before they are completed. This is an excellent way of preventing any possible allegations of trustee theft since every action will be undertaken with the knowledge and cooperation of all the parties involved.

What Constitutes Trustee Malfeasance?

There are various possible actions or inactions that a trustee can be held accountable for in the eyes of the law. A trustee may be considered at fault as long as they result in adverse outcomes for the trust and the beneficiaries.

These include:

• Trying to change, disguise, or hide any transactions you have undertaken on behalf of the trust.
• Taking assets and placing them on sale to keep the proceeds for yourself rather than the intended beneficiary.
• Using the trust as collateral to take out personal loans without the express authorization of the trustor.
• Distributing assets belonging to the trust indiscriminately or without regard for the trust’s objectives.
• Paying yourself an excessive amount of money as trustee fees for your services.
• Excluding, pocketing, or hiding any known assets from the purview of the trust with the intention of keeping the beneficiaries away from it.
• Mismanaging the trust’s assets in ways that negatively impact the value of the trust.
• Showing a bias for one beneficiary over another by allocating more resources to them than the other in disregarding the trust stipulations.

What Happens When You Are Accused of Trustee Theft?

When a trustee is accused of breaching their fiduciary duties or outright theft, their first action should be to contact a competent estate attorney. A reasonable attorney can provide guidance to settle the affair with minimal trouble.

The goal should be to settle the matter through face-to-face discussions with all the parties involved, as taking things to court might be significantly more expensive, time-consuming, and combative.

A good lawyer will have the experience, skills, knowledge, and dedication required to handle any negotiations before they turn into litigation. Should the situation devolve into a court case despite the efforts of your legal representation, then your lawyer will usually call for a forensic accountant to examine the trust’s financial records to determine whether any inappropriate transactions were made.

This is why any trustees need to keep meticulous and comprehensive records of all their actions on behalf of a trust. These records may be what saves them from potential legal trouble down the line.

Hiring a lawyer immediately after being accused of theft can save you from facing potentially life-changing consequences. An attorney may advise you to step down immediately, giving you time to plan your defense as your lawyer tries to explain the potential misunderstanding before it becomes a bigger problem.

Trust litigation attorneys are specially trained to help people defend themselves against trustee theft charges in civil and criminal court.

What Are the Potential Consequences of Trust Malfeasance Charges?

Trustee theft is a serious charge in the United States, especially since certain trusts can be extremely valuable.

When you consider a trust valued at millions of dollars, it becomes obvious why any suspicion of theft must be taken seriously, and any proven malpractice must be punished severely. The potential consequences of being charged with trustee theft include:

• Facing Embezzlement Charges: A trustee who has been found liable for breaching their fiduciary duties may be brought up on criminal charges because, in the eyes of the law, stealing money from a legal estate constitutes embezzlement. Embezzlement qualifies you to face criminal charges regardless of whether any individual chooses to pursue the case. Embezzlement carries felony charges with it that might result in lengthy prison time.
• Removal of Their Trustee Designation: While this seems like a mild punishment, it should be recognized that in some cases, the trouble might simply result from a trustee’s lack of organizational skills. Poor bookkeeping might result in misplaced funds, lapsed bills, and a general lack of confidence in the trustee’s ability to manage the trust competently.
• Civil Court Charges: The beneficiaries that would have received the proceeds of a trust will have the legal right to sue the trustee accused of theft. The courts will allow them to recover the misappropriated assets or funds from the offending party.

Associated Penalties

Every case is different, so we should not try to make blanket assumptions about what the outcomes will be. Every case of trustee theft will vary depending on its unique circumstances. Should you be defending yourself against misdemeanor will and trust fraud charges, you may face up to a year in prison, besides any fines you might be charged.

If the charges are stepped up to felony will and trust charges, the sentence might be more than five years in an American correctional facility as we said earlier, the fact that many trust cases involve large sums of money, and they are often accompanied by civil proceedings as well.

Final Thoughts

A competent trustee can be a great asset to a grantor, as they can bring in the experience, skills, and expertise required to maintain and grow the value of a trust. The problem many people have is finding a trustee that they can put their faith in completely.

Some people have the misfortune of falling prey to unreliable trustees who take advantage of their position to enrich themselves at the expense of the trust and its intended beneficiaries. This is why the law is so stringent regarding cases of trustee theft.

Should you ever find yourself accused of trustee malfeasance, your first move should be to bring a qualified trust litigation attorney on board. Probate lawyers have the skills to deal with all the issues that might arise while managing a trust.

Be sure only to consider attorneys with a proven track record of dealing with will and trust cases, as they can guide you toward a satisfactory resolution. Call us today.