Trustee Stealing from a Trust

How Do I go About Contesting the Trust?

What are the first few steps to correct the cheating from the Trustee?

First, you need facts where the fiduciary duty of the Trustee fails to complete. It’s vital to have all your documents in order. Once you have an idea of how to proceed, contact a Hess-Verdon Trust attorney. Here at Hess-Verdon, we offer a free, no-obligation case review.  

What if there is Breach of Fiduciary Duty found?

When working with your estate litigation attorney, they will guide you through the litigation process, and please take note, it takes time to prove. The Trustee will fight back and will utilize the funds of the Trust to fight off any beneficiary attacks. Once established; however, many remedies are available to recoup the loss, including suing the Trustee civilly. 

Probate Topics, Probate Litigation 

Tips A BENEFICIARY SHOULD KNOW TODAY!

Tips A TRUSTOR SHOULD CONSIDER

Trustee self-dealing?

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Do you feel the Trustee is stealing from the family trust? If so, you need to act swiftly according to the rules of the court.  

We will go over them here.  

The primary purpose of our writings is to help beneficiaries and Trustees with the complexity of the Trust litigation process. But before you enter into the actual litigation process, let’s review how a Trustee can steal from a Trust and how you, as an heir or beneficiary, must stay on the right side of the courts.

Ready? Read on.

Can a Trust be Contested

Are you the Trustee, Beneficiary, or Heir of a Living Trust? The quick answer is, “Yes, contesting a trust is possible!”. When contesting a trust, you will need to consider how the Trust is invalid. 

You will have to determine if the Trust invalid due to state trust laws, undue duress, or forgery? 

If you are disputing a Trust, you are seeking to change the inheritance, Bequest, gift, or the distribution per the Trust agreement.

Why a Trust?

A Trust’s main objective is for the grantor/settlor to manage their estate as they wish and have the assets distributed to the heirs and beneficiaries without probate. When there are ambiguities in the Trust creation process or when a Trustee is self-dealing, then litigation typically arises. 

With that said, there are many types of trust vehicles, such as revocable and irrevocable trusts, but once the settlor dies, the Trust becomes irrevocable straight away. Irrevocable Trusts are no longer changeable. 

trust administration Process

Now, there are steps involved during the trust administration process that the Trustee must critically follow, and there are time-frames to address on time.

If you feel the Trustee is embezzling the estate assets, etc., you will need a Trust Litigation Lawyer to guide you.   

Click here to meet Hess-Verdon Attorneys, or call 1-888-318-4430.

So, let’s first determine what case you may have based on the ways a Trustee can breach their fiduciary duty.

To recap, a Trustee holds legal title to the trust properties, while the beneficiaries hold equitable title. Therefore, the Trustee “must” give an accounting of the Trust, which includes investment, trust administration, and distribution updates. As a beneficiary, you must compel the Trustee to redress their lack of transparency.

How to Recognize a Breach of the Trustee's Beneficiary Duties

When a Trustee self-deals, they typically fall into the below categories:

  1. Commingling personal assets: Many times, a Trustee is a family member who may have already been taking care of the settlor, and may have been dipping into the estate. Now that the settlor has passed away, full transparency of the Trust assets must be accounted for by the Trustee. Without the permission of the Trust, the Trustee moves assets into their name. 
  2. Conflict of Interest:  There are times when the Trustee has a conflict of interest with one or more of the assets. There are times when a Trustee sells assets way below market value, for example. If you can show the going market value for the assets is way above the selling price without transparency, it may be self-dealing.
  3. Trustee and Co-Trustee not getting along: If the Trustee and Co-Trustee are not fully transparent to one another, and if the Co-Trustee so happens to break their fiduciary duty, the Trustee can be held responsible.
  4. Improper Gifts: If the settlor never gifted to such a degree as is under the Trustee care, then it may be demonstrated improper management of the Trust assets.
  5. Losses created by the Trustee’s wrongful act or omission:  If the Trustee is not doing their due diligence to ensure the management of the estate investments, it can be construed as negligence and thus not following up with their duties.
  6. The Trustee pays themselves an excessive amount of compensation: Unfortunately, when it comes to ‘excessive’ compensation, it is sometimes subjective, and the courts based on other compensating factors may decide Trustee fees were reasonable.
  7. Missapropriates assets: When the Trustee allocates all assets, there must be a full accounting; otherwise, assets can shift into the wrong hands, counter to what the settlor had in mind.

How to Recognize a Breach of the Trustee’s Beneficiary Duties

When a Trustee self-deals, they typically fall into the below categories:

  1. Commingling personal assets: Many times, a Trustee is a family member who may have already been taking care of the settlor, and may have been dipping into the estate. Now that the settlor has passed away, full transparency of the Trust assets must be accounted for by the Trustee. Without the permission of the Trust, the Trustee moves assets into their name. 
  2. Conflict of Interest:  There are times when the Trustee has a conflict of interest with one or more of the assets. There are times when a Trustee sells assets way below market value, for example. If you can show the going market value for the assets is way above the selling price without transparency, it may be self-dealing.
  3. Trustee and Co-Trustee not getting along: If the Trustee and Co-Trustee are not fully transparent to one another, and if the Co-Trustee so happens to break their fiduciary duty, the Trustee can be held responsible.
  4. Improper Gifts: If the settlor never gifted to such a degree as is under the Trustee care, then it may be demonstrated improper management of the Trust assets.
  5. Losses created by the Trustee’s wrongful act or omission:  If the Trustee is not doing their due diligence to ensure the management of the estate investments, it can be construed as negligence and thus not following up with their duties.
  6. The Trustee pays themselves an excessive amount of compensation: Unfortunately, when it comes to ‘excessive’ compensation, it is sometimes subjective, and the courts based on other compensating factors may decide Trustee fees were reasonable.
  7. Missapropriates assets: When the Trustee allocates all assets, there must be a full accounting; otherwise, assets can shift into the wrong hands, counter to what the settlor had in mind.

How Do I go About Contesting the Trust?

What are the first few steps to correct the cheating from the Trustee?

First, you need facts where the fiduciary duty of the Trustee fails to complete. It’s vital to have all your documents in order. Once you have an idea of how to proceed, contact a Hess-Verdon Trust attorney. Here at Hess-Verdon, we offer a free, no-obligation case review.  

What if there is Breach of Fiduciary Duty found?

When working with your estate litigation attorney, they will guide you through the litigation process, and please take note, it takes time to prove. The Trustee will fight back and will utilize the funds of the Trust to fight off any beneficiary attacks. Once established; however, many remedies are available to recoup the loss, including suing the Trustee civilly. 

What are some Remedies to recoup the Estate from Breach of Trust?

After the Trustee has been found guilty of breaching their fiduciary duty, the courts can call out for the following:

  1. Trustee Removal
  2. Removing certain assets out of the hands of the Trustee and possibly appoint a Co-Trustee
  3. Reduce the Trustee’s compensation
  4. Compelling the Trustee to perform duties.
  5. Court obtains an order enjoining the Trustee from acting in Breach.

1st Takeaway:  You need to know there is a time window of one hundred and twenty days to file an objection. IF the Trust has already been admitted to probate, after the Trustee gives notice to all parties via the Notice of Irrevocability and Notice of Trust Administration sent via mail notice, you have 120 days under the probate code section 16061.7 to act.

Why Choose Hess-Verdon?

Here at Hess-Verdon & Associates, we counsel clients on aspects of estate disputes. We review the merits of bringing a claim, filing or defending a claim, and, when necessary litigating a claim through trial or settlement.

Our expert team of trust litigators can settle such proceedings without going to court after taking into account the merits of the positions advanced by the respective parties and the tax rules applicable.  

Handling thousands of trust litigation cases helps us know exactly steps are crucial for your situation.

Visit us in Fashion Island in Newport Beach. Should you believe you need a team of attorneys, paralegals, and helpful, caring staff, then call today.

What are some Remedies to recoup the Estate from Breach of Trust?

After the Trustee has been found guilty of breaching their fiduciary duty, the courts can call out for the following:

  1. Trustee Removal
  2. Removing certain assets out of the hands of the Trustee and possibly appoint a Co-Trustee
  3. Reduce the Trustee’s compensation
  4. Compelling the Trustee to perform duties.
  5. Court obtains an order enjoining the Trustee from acting in Breach.

1st Takeaway:  You need to know there is a time window of one hundred and twenty days to file an objection. IF the Trust has already been admitted to probate, after the Trustee gives notice to all parties via the Notice of Irrevocability and Notice of Trust Administration sent via mail notice, you have 120 days under the probate code section 16061.7 to act.

Why Choose Hess-Verdon?

Here at Hess-Verdon & Associates, we counsel clients on aspects of estate disputes. We review the merits of bringing a claim, filing or defending a claim, and, when necessary litigating a claim through trial or settlement.

Our expert team of trust litigators can settle such proceedings without going to court after taking into account the merits of the positions advanced by the respective parties and the tax rules applicable.  

Handling thousands of trust litigation cases helps us know exactly steps are crucial for your situation.

Visit us in Fashion Island in Newport Beach. Should you believe you need a team of attorneys, paralegals, and helpful, caring staff, then call today.

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