Misappropriation of Trust Funds

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Misappropriation of Trust Funds by the Trustee?

Has there been a misappropriation of trust funds by the Trustee? If the Trustee has misappropriated funds, it may be a civil and criminal case. A thorough investigation of the books from an experienced Trust Litigator will help determine if the Trustee misappropriated the Trust funds.

Probate Topics, Probate Litigation 



What to do if a trustee is misappropriating from a trust



What to do if a trustee is stealing from a trust

The misappropriation of trust funds by a trustee is not only severe but can be criminal. Before going down the path to sue the Trustee for breaching their fiduciary duty, a thorough strategic plan must be drawn out to uncover in sequence the probability of where the breach occurred.

How to Request an accounting of an estate

If you believe the Trustee of the family trust has mismanaged funds, assets, etc., you will need to consult an estate planning attorney who focuses primarily on trust and estate litigation.  

Here are some questions that a Hess-Verdon Attorney will ask you:
  1. Do you have a copy of the Trust? Was it received within the last six months?
  2. Have you requested bank records, asset valuations? Is everything written and dated?
  3. Are there any in Terrorem clauses?
  4. When was the Trust created?
  5. Was there theft from the estate before inventory?
  6. Was the grantor in the right mind when creating a Trust? Was there dementia when the Trust was created?
  7. Are you receiving updates from the Trustee?
  8. What makes you think there is Misappropriation of Trust funds?

The above questions are just a few questions a Hess-Verdon attorney will ask. You can take advantage of the current No Obligation, Free Consultation case review. Within an hour, you will know if you have any grounds to stand on.

Now, we understand this is a trying time, especially that the grantor has just passed away and including fraudulent acts for favoring the Trustee and not the beneficiaries. 

What should You do to Receive a Proper Update on the Assets in question?

  1. If you have not done so, send a letter, email, etc., to the Trustee to be transparent on accounting. There is a time-frame allowed for meeting your beneficiary rights. Typically should give 60 days to respond.

Note: After waiting for a proper update, a review on whether misappropriation of trust funds is applicable. Receiving accounting is the litmus test to see if the Trustee is compliant and living up to their fiduciary duty.  

Now, if you are passed all the checks above, and the Trustee is not communicating, you will want to seek counsel. You will want to talk with the counsel you want to remove a trustee involuntarily. 

So what are the grounds you seek to remove the Trustee?

There is a handful of reasons to remove a Trustee from a trust. Some are very obvious, while others are somewhat obscure. An action to remove the Trustee begins with a Petition to Remove Trustee. Your counsel will file the matter with the appropriate court. A carefully prepared case is of the utmost importance.

Are you a Beneficiary of a Trust and in Need of Counsel?

If you are a beneficiary and are concerned that the trust administration process is compromised, you have the right to legal action. Here as Hess-Verdon, we can discuss your situation, allowing you to understand where you stand and the rights of a beneficiary.

Disputes involving Living Trusts include the following:

  • Trustee fails to make distributions: Under probate code 16000, a trustee has the fiduciary duty to administer the living trust according to the trust instrument. Many times, a trustee has “absolute” discretion over trust distributions. With that said, they must still work within their “Fiduciary principles,” i.e., be fair.
  • Claims of breach of fiduciary duty
  • Failure to administer the Trust based on the trust document.
  • The Trustee is “self-dealing” with the trust assets.
  • The Trustee pays themselves an exorbitant compensation.
  • Trustee fails to report to the beneficiaries
  • Failure to make a timely accounting
  • Failure to invest trust assets properly

How do we contest the Trust?

  • Get a copy of the trust agreement from the Trustee. Make sure to review all pages and amendments. The Trust should clearly state the responsibilities of the Trustee and how disbursements are managed.
  • Verify you have the right to request a report.   
  • Contact a Hess Verdon experienced trust litigation attorney. Hess-Verdon Lawyers offers a second opinion, generally at no-cost to our new clients.

If you, as a beneficiary, find yourself in need of legal counsel, Hess-Verdon & Associates are well versed from the Beneficiary standpoint. 

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