There are many possible reasons why your family member created the trust from which you and others benefit. One example is to make sure that the beneficiaries do not have unrestricted access to inheritance, or use the money in a manner that the trustor would not approve. However, very few people who set up trusts expect that the trustee charged with managing the funds will be the one to take advantage of the responsibility.
The trustee’s primary duty is to manage the trust according to the grantor’s wishes and then to the best interests of the beneficiaries. Trustees cannot favor one beneficiary over another or use the assets to their advantage without permission. Any mishandling of the trust by the trustee is called a breach of fiduciary duty, and it is illegal. A few examples are:
- Not distributing the payments to beneficiaries per schedule
- Valuing or managing the estate in a negligent manner
- Taking more than the allowed compensation without consent
- Not investing money in the trust per instructions
- Not responding to a request for a fiduciary account
- Misappropriating property from the trust without consent
Some signs of a trust violation can be subtle and difficult to detect. If you believe that the person in charge of your family’s estate is in breach of fiduciary duty, it is crucial to act quickly. According to CCP § 337, the statute of limitations in California is four years. If the trustee is guilty of mishandling the funds, the court could remove him or her from the trust and recover the stolen or misused assets. In extreme cases, a judge may find the trustee guilty of criminal misappropriation, which could result in prison time.