Legal Advice for Trustees Facing Financial Abuse and Coercion Claims

What is a Trustee Coercion Claim?

Also known as undue influence, coercive control is simply an act of seeking control and dominance over another person. It involves using force or threats to bully and exploit someone’s weakness for personal gain. It can also involve a range of financial acts, such as depriving a person of their financial support and independence means.

According to California law, Coercive control is an offense, and individuals can face up to 5 years of imprisonment if found guilty. Beneficiaries of a trust have the right to sue the trustee if they suspect acts of coercion or control from the trustee.

Is Trustee Malfeasance Similar to Trustee Coercion?

Yes, trustee coercion is quite similar to trustee malfeasance. Typically, the latter refers to a trustee’s self-serving, negligent, or retaliatory behavior. It encompasses a range of offenses, both unintentional and intentional. Failure to follow the trustee’s duties is a crime and can provide grounds for a lawsuit against the trustee in court.

The only difference is trustee coercion involves using force and intimidation to deprive the beneficiaries of their benefits. It also involves acts of financial abuse, with the trustee using their power to misuse or misappropriate the trust’s funds and assets.

What is Undue Influence?

Undue influence is another instance that can lead to lawsuits against the trust. It is a mental or emotional abuse that can be used against the trustor to modify the terms or allocate more assets. The grantor is not usually in their best state of mind, which leads them to be easily manipulated or controlled to do something unknowingly. Beneficiaries can use undue influence to challenge a will in case of any instances below:

If the grantor did not manage their financial affairs

The inability of the grantor to manage their financial matters is a sign of mental incapacity. Beneficiaries can argue that the trustor was not an independent thinker when making the will. This makes them easily influenced to control their finances in an unsuitable way.

The grantor did not live independently.

Undue influence can occur if the person does not live independently. If the beneficiary can prove that the grantor did not live alone when making the will, it is possible to prove undue influence. Living with a loved one in nursing care can be reason enough to prove that the grantor could not make their own decisions.

Age of the grantor

Old age can lead to a person losing memory. It is possible to prove undue influence in court if you believe the trustor was not in their best mental state when making the will. Usually, older adults are pretty vulnerable, especially to coercion control, and can easily change the terms of the trust.

Situations When Coercion Can Be Used to Manipulate

Trustees are not the only persons in a trust that can use coercion to manipulate others. Here are some of the instances coercive control can be used in a trust:

• Use of intimidation and creating a hostile environment for the grantor until they change details of the trust in favor of others.
• Beneficiaries use intimidation and threats to cut off the life support of an ailing grantor if they fail to allocate a significant share.
• Using the grantor’s unstable mental state to manipulate them into allocating more assets to the beneficiary.
• Use lies to convince the grantor to cut off a beneficiary from the trust or a part of asset allocation.

Note that an individual doesn’t need to have mental incompetence for coercion to be used to manipulate them into providing favors. Coercive control is a powerful and effective tool, mainly when used on older adults. Regardless, it is pretty easy to prove coercion in court if the grantor is found to have had dementia or other ailments that can lead to mental incompetency. It is also imperative to note that a person might be having a hard time remembering or dealing with daily functions because of old age and not because of mental incompetence.

What are the Duties of a Trustee?

Trustees are tasked with a range of duties known as fiduciary. Firstly, they have a duty of loyalty. They are supposed to be loyal to the trustor or grantor and the trust’s beneficiaries. Besides, they are also expected to act and perform in the interest of the beneficiaries at all times.

Trustees should also ensure there are no conflicts of interest. For instance, they should avoid selling assets or properties to themselves at a lower price. Technically, the trust provides them with the right to sell or buy property in the trust. However, selling to themselves or a close relative can lead to conflicts with the beneficiaries.

They also have a duty of disclosure. They are required to keep the beneficiaries updated with the latest information regarding the trust. Failure to do so can be regarded as a breach of trust duties, which can lead to a lawsuit. Finally, the trustees have a duty to protect the trust against financial claims or legal proceedings. This can include bogus claims from creditors and lenders.

How Can Trustees Protect Themselves from Coercion and Financial Abuse Claims?

Coercion and financial abuse claims are pretty common in courts. It does not, however, mean that the trustees are at fault. Sometimes, beneficiaries can place these claims with no basis. Like beneficiaries, trustees also have rights and need help proving their innocence. Here are some of the ways they can use to protect themselves from such claims:

Hire an experienced litigation lawyer.

First and foremost, they should seek the services of a professional lawyer. Look for a lawyer with a specialty in litigation cases for trustees. An experienced lawyer should be capable of helping the trustee gather evidence and protect them from coercion and financial abuse claims.

Unless there is financial malpractice or fraud, the trustee should be safe. The lawyer can easily argue their case.

Prepare a financial record.

If need be, the trustee can also hire a professional accountant to help collect and file financial data to prove their case in court. This is one of the most critical aspects of the trustee who wants to win a lawsuit against financial abuse claims from trustees. Note that to avoid financial abuse claims, you should provide the beneficiaries with some financial report as a trustee.

Get a witness

If the beneficiaries claim the trustee used coercion control to limit their finances, the trustee can argue their case if they have a witness. The witness must testify and prove the trustee has been loyal and did not breach their fiduciary duties.

They can also back up their argument with CCTV footage of their daily activities in their fiduciary duties. The beneficiaries might be having “personal” issues with the trustee, and claims are a means to remove them from their position forcefully.

What is the Penalty for Trustee Coercion and Financial Abuse?

A law was passed on December 29, 2015, illegalizing trustee coercion and financial abuse. If trustees are found guilty by the court, they can face up to 5 years imprisonment. They can also risk huge penalties, replacement, removal, or surcharging. Ideally, the court will ensure the trustee’s wrongdoing does not compromise the beneficiaries and that all the funds are utilized as the trustor intended. Even if the trustee’s funds will be used to make the whole, the court will ensure the trust runs as per the grantor’s terms.

Who Pays for the Legal Fees When the Trustee is Accused?

The trust pays for all the legal fees required in the litigation process. However, the funds might be processed after the court has approved, which might prompt the accusers and accused to pay for the fees out of their pockets first. Besides, the trustee can also use funds allocated for emergencies or to pay debt and creditors to pay the legal fees.

Final Thoughts: Do I Need a Trust Litigation Lawyer?

Yes, if you are a trustee facing charges of financial abuse or coercion, it is imperative to hire an experienced lawyer to help you prove your innocence in court. All you need to do is ensure you hire a professional with a specialty in trustee cases. Are you looking for legal services in California? Contact us for the best services in town, and let us ensure you prove your innocence in court.