Here’s What to Know & Do About a Breach of Trust
Estate planning is complicated when everything goes according to plan—let alone when it doesn’t! If a trustee is failing to observe their duties or carry out the necessary terms, that’s called a “breach of trust.” Keep reading for tips on recognizing a breach of trust, as well as what you can do about it.
Breach of Trust Basics
Trustees are responsible for a lot of legal duties. Any failure to observe those duties, whether intentionally or through negligence, results in a breach of trust. To put it simply, if a trustee causes harm to any beneficiaries or trust assets, it’s a breach of trust.
There are a lot of ways a trustee can betray the trust, and some are easier to spot than others. For example, a trustee is not allowed to accept any sort of bribe or kickback in relation to trust assets. That one is pretty clear! On the other hand, a trustee may subtly favor one beneficiary over another, which can lead to unfair distribution of assets to beneficiaries. A breach of trust like that isn’t as easy to catch.
Other examples of a breach of trust include self-dealing (putting their own interests above the interests of the beneficiaries), mixing personal funds and trust funds, managing the assets in a negligent way (with intent to deceive), and more.
What You Can Do
If you suspect a breach of trust, there are a few things you can ask the court to do. For instance, if you sue the trustee in question and the case succeeds through court, there are a few things that could happen next.
The judge in charge of your breach of trust case might remove the trustee from their position. If the trustee is also a beneficiary, their share of the inheritance might be reduced—by an amount equal to the amount they lost or mismanaged. This is called a surcharge. If there is no way to recover the lost assets or funds, a judge may decide that the trustee has to compensate the trust with their own personal funds.
Regardless of the specific outcome, the first step you need to take if you suspect your trustee of committing a breach of trust is to seek professional legal advice. Trusts are complicated, and you’ll want an experienced attorney on your side to make sure justice is served.
Estate, Wills, and Trust Planning in Birmingham
At Waters Sullivan, we believe compassion comes first. When you’re dealing with something as important and as complicated as a trust, you need someone you can rely on. Kristin Waters Sullivan specializes in this area, and can handle the process for you—because you have enough to worry about.
If you suspect that a trustee is taking advantage of a trust, it’s time to take action. Get in touch to schedule a consultation today. We look forward to serving you.