When a trust is given to a trustee, the trustee has agreed to manage the trust’s assets on behalf of the beneficiaries and must handle all trust assets by the terms dictated in the trust. If a trustee knowingly or unknowingly mismanages the trust’s assets and does not follow the terms described in the trust, it is referred to as a breach of fiduciary duty and can lead to civil litigation.
As one of the leading estate lawyers in Westlake Village, Catanese and Wells have helped clients settle a wide variety of breaches of fiduciary duty cases. A breach of fiduciary duty can take many forms, from favoring one trustee over another to neglecting to pay taxes or simply making bad investments. Whether the breach was made knowingly or not, it is important that trustees be held accountable in the event of trust misconduct. If you or a loved one are currently the beneficiaries of a trust, it is crucial all beneficiaries know the most common signs a trustee has breached a fiduciary duty. Below, Catanese and Wells have provided readers with some of the most common signs a trustee has breached their fiduciary duty.
Conflicts of Interest – The role of a trustee is to manage a will’s asset according to the wishes of a trustor. When a person’s decisions show a clear favoritism towards another individual or party, such as investing in a family member’s business or hiring a close friend, this is often a sign that the trust is being mismanaged.
Incomplete Records — When given a trust, the trustee is required to keep detailed records of their investments, transactions and all money going in and out of the trust. If the trustee is not able to produce the documents when requested, this can be a sign that the trust is being mismanaged or of the trustee’s misconduct.
Commingling of Assets — Commingling of assets occurs when a trustee mixes trust money with their own funds or assets. Commingling assets is a breach of trust and can lead a person open to civil liabilities or embezzlement charges. If there is any indication that the trust’s assets have been mixed with a trustee’s personal assets, it is likely a sign of a breach of fiduciary duty.