What you need to know about trustee breach of the fiduciary duty

What you need to know about trustee breach of the fiduciary duty

On Behalf of | Apr 19, 2023 | Estate Administration |

Dealing with the loss of a loved one is never easy. And as you try to find a way to cope with the emotional impact of losing your loved one, there may be other issues that come up that make the grieving process even more challenging. Among these are navigating the probate process and figuring out how your loved one’s estate is going to be administered.

If you’re loved one was diligent in creating their estate plan, then they might’ve utilized a number of trusts to bypass the probate process and ensure that their estate was left in competent managerial hands. That should put your mind at ease, right?

Maybe, but maybe not. All too often, these trusts are mismanaged and subjected to fraud, which can put you and other beneficiaries at a significant financial disadvantage.

Signs that the fiduciary duty has been breached

A trustee has a fiduciary duty. This means that they’re required to put the interests of the trust and its beneficiaries first. All decisions that are made should support those interests. If they don’t, then the fiduciary duty may have been breached.

But breaching the fiduciary duty can involve much more than just some bad investment decisions. Here are some signs that the fiduciary duty has been breached in your situation:

  • Inadequate accounting: Trustees are required to keep a detailed accounting of trust transactions. This includes monitoring disbursements and investments, that way you, other beneficiaries, and the court know how trust assets are being managed. If the trustee’s accounting is lackluster, providing you with more questions than answers, then you’ve got a red flag that the fiduciary duty is being breached and you should ask more questions.
  • Lack of documentation: You should be able to request to see documentation pertaining to the trust’s management. If the trustee drags their feet or otherwise provides you with incomplete information, then that may be a sign that they’re trying to hide something.
  • Funds go missing without proper justification: If money is being misappropriated from a trust, then the trustee is probably going to try to justify it in one way or another. But those explanations might not be viable. Make sure you’re listening closely and fully understand what the trustee is saying. That way you can investigate the matter more fully to better determine what’s going on.
  • Favoritism: The trustee should treat all beneficiaries in accordance with the terms of the trust. But if the trustee appears to show favoritism towards one beneficiary, then the fiduciary duty may be breached as it pertains to you. Make sure you review the terms of the trust so that you better understand how assets are to be distributed.
  • Co-mingling funds: Trust assets should be held separate from the trustee’s own accounts. If the two are mixed, then there’s a good possibility that the trustee is trying to siphon money out of the trust for their own personal use.

Have you been subjected to a breach of fiduciary duty?

If you think that you have, then now is the time to talk to an attorney who understands this area of the law. By doing so, you can create a legal strategy to bring the mismanagement to a stop so that you protect your financial interests. You might also be able to recoup any money that you’ve lost out on.

But these are oftentimes complex matters. That’s why now is the time to start assessing your case to determine your next course of action.