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We Are Here To Provide Legal Guidance During Some Of Life’s Most Difficult Times

Five ways trustees may breach their fiduciary duty

On Behalf of | Apr 8, 2022 | Uncategorized |

Trustees carry a heavy responsibility when they administer the trust of a person who has died. After all, they’re tasked with ensuring that the wishes of a deceased individual are carried out and that the terms of the trust are adhered to so that beneficiaries receive that to which they are entitled. In that regard, trustees are considered fiduciaries, meaning that they must put the interests of the trust and its beneficiaries first. That might sound simple enough, but the truth of the matter is that trustees are accused of wrongdoing all the time. When the fiduciary duty is alleged to have been breached, then litigation may follow shortly thereafter.

How does one prove a breach of duty?

First off, it’s important to note that the person who alleges that a breach has occurred has the burden of proof. So, if you’re a named beneficiary of a trust and suspect that the trust has been mismanaged, then the onus is on you to gather evidence to support your position.

As you navigate your case, you’ll need to look for signs that the fiduciary wasn’t acting in your best interests. But how do you go about doing that? You may want to consider each of the following situations that may be present in your circumstances:

  1. Commingling of assets: A trustee should keep the trust assets separate from his or her own. If the assets become commingled, then it can be difficult to determine where the trustee’s assets end and where the trust’s assets begin. This can leave you and the trust facing significant losses. So, if you suspect that trust assets have been commingled, which may be evidenced by the trustee’s sudden acquisition of expensive items, then you should investigate the matter further.
  2. Missing assets: A telltale sign of improper management of trust assets is missing assets. If you and the trustee can’t locate assets, then there’s a good chance that the trustee did something with them that he or she shouldn’t have done, like selling them and retaining the proceeds for himself or herself. That’s why it’s critical that you pay close attention to the trustee’s accounting.
  3. Inadequate accounting records: In far too many instances, the trustee fails to properly account for the trust’s assets. They may improperly document payments and investment income, or they may fail to document important financial transactions altogether. This can cloud the financial position of the trust and cause you to suffer financial losses.
  4. The trust funds are being blown: The trustee is required to manage trust assets in a prudent fashion. If the trust is losing funds too quickly, then you should start asking questions about where the money is going.
  5. The trustee has conflicts of interest: The trustee should also be acting in an impartial fashion, ensuring that he or she is abiding by the terms of the trust. In some instances, though, the trustee shows clear favoritism towards certain beneficiaries, which could put you at an unfair financial disadvantage.

Be prepared to litigate your case

Although some cases involving breach of the fiduciary duty settle, a significant number of them end up heading towards litigation. With that in mind, you need to be prepared to present your case in court. This means crafting persuasive legal arguments that confidently apply the law to the facts at hand.

Doing so in these matters can be complicated and confusing, but you can take the guesswork out of your case by working closely with a legal advocate who is skilled in this area of the law. To learn more about the duties of the trustee and what to do if you suspect that the fiduciary duty has been breached, then please think about discussing your circumstances with an experienced legal team.