A trustee has a legal, fiduciary duty to act prudently in managing the trust solely in the best interests of its beneficiaries. If a trustee violates this fiduciary duty, the beneficiaries can pursue legal action to remove the trustee and, in some situations, sue a trustee for their wrongdoing.
Some common reasons trustees can be sued include:
- Engaging in self-dealing or other conflicts of interest.
- Failing to make trust distributions or provide an accounting of trust assets.
- Failing to keep beneficiaries informed about trust administration.
- Treating a beneficiary or a class of beneficiaries unfairly.
- Stealing or mismanaging trust assets.
- Incurring unnecessary fees and expenses on behalf of the trust.
- Failing to abide by the terms of the trust.
- Wasting trust assets.
Can you file suit against a trust?
No, you cannot file suit against a trust. However, you can sue the trustee of the trust if you have reason to believe they’ve breached a fiduciary duty.
A beneficiary who believes a trustee is mismanaging trust assets, failing to fulfill their legal duties, or embezzling from the trust can file suit against a trustee. Additionally, if you have a legal claim to trust property, you can pursue a lawsuit against the trustee to seek recovery of the asset.
You can also challenge the legal validity of a trust in various circumstances, such as for incapacity, undue influence, fraud, or financial elder abuse. Contesting a trust does require you to take legal action and file a petition in probate court.
Can trustees sue each other?
Although trustees do not owe each other the same fiduciary duties they owe trust beneficiaries, the duties they owe beneficiaries to safeguard trust assets may obligate them to sue another trustee if that trustee is breaching fiduciary duties owed to the trust beneficiaries, including filing a petition with the probate court to remove another trustee from their position.
Under California Probate Code §15642, a co-trustee can petition the probate court to remove another trustee if any of the following apply:
- The trustee has committed a breach of the trust.
- The trustee is insolvent or otherwise unfit to administer the trust.
- Hostility or lack of cooperation between the co-trustees has hindered the administration of the trust.
- The trustee has failed or declined to act.
- The trustee’s compensation is excessive under the circumstances.
If the court agrees that the trustee should be removed, it can appoint a replacement trustee, or the co-trustee can continue to serve as the sole trustee of the trust. The trust language may be instructive as to who should succeed a removed trustee, if anyone.
When should I contact a trust litigation attorney?
If you are a trustee, co-trustee, successor trustee, or beneficiary who believes that a trustee has acted improperly in administering a trust, you should contact a trust litigation attorney as soon as possible. A knowledgeable trust litigation lawyer can discuss the details of your situation with you and explain your legal options. Because only certain individuals can file suit against a trustee, they can only do so in specific circumstances, and statutes of limitations may act to bar your claims if you delay, it’s essential you contact a trust litigation attorney the moment you suspect something is wrong.
Have questions? We’re happy to discuss.
Call (424) 320-9444 or email [email protected]
Read More
Can Trustees Be Held Personally Liable?
The Trustee’s Guide to Trust Distributions
The Trustee’s Guide to Avoiding Trustee Removal
The Guide to Trustee Succession and Resignation
About RMO, LLP
RMO LLP provides personal and efficient inheritance dispute services to individual and institutional clients. The firm’s attorneys focus on probate litigation involving contested trust, estate, probate, and conservatorship matters. Serving California and Texas, with offices in Los Angeles, Pasadena, Orange County, San Diego, Fresno, the Bay Area, Dallas, and Houston. For more information, please visit RMO Lawyers.
