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Aug 30, 2021 by |

San Francisco Financial Elder Abuse Attorneys: When A Trustee Steals From A Trust

ATTORNEY NEWSLETTER

Stopping Trustee Theft 

Removal And Surcharge Remedies

Appointing Successors

Many Californians, especially seniors, create trusts to hold their assets, and there is a whole division of the California Probate Code that governs trusts.  See Cal. Probate Code §§ 15000-19530.  The individual creating the trust, referred to as the “trustor” or “settlor,” usually acts as his or her own trustee at the beginning.  The trust will usually name others who succeed the settlor as trustees when the settlor is no longer able to act or dies; these persons are referred to as successor trustees and may include a surviving spouse, other family members, financial advisors, or professional fiduciaries.  All of these individuals are held to the legal standard of fiduciary duty once they begin to act as trustee. See, e.g., Probate Code §§ 16040-16042.  Unfortunately, some of these appointed successor may breach the fiduciary duty they owe by embezzling or commingling funds, moving trust funds around or even out of the trust entirely for their own benefit, borrowing against trust assets, failing to put the trust’s (and settlor/beneficiary’s) interest first, or losing or mismanaging trust property. The incidents of theft or self-dealing are all grounds for removing a trustee, and seeking damages (known as surcharging) for whatever the trust has lost as a result of the misconduct.  Probate Code §§ 16400-16421, and 17200.  Evans Law Firm, Inc. represent settlors and trust beneficiaries who have suffered injury as a result of a trustee’s breach of fiduciary duty.  If you or a loved one has been a victim of a breach of fiduciary duty by a trustee in California, contact the Evans Law Firm, Inc. today at (415) 441-8669 and we can help.  Our toll-free number is 1-888-50EVANS (888-503-8267).

Breach of Trustee Duty

A trustee is required to use “reasonable care, skill, and caution” in their management of trust property.  Probate Code § 16040(a).  Further the trustee is required to distribute trust property according to the terms of the trust, and administer the trust “solely in the interest of the beneficiaries.”  Probate Code § 16002(a). If  the trustee’s actions benefit the trustee, their family or friends or if they act in another way that violates the terms of the trust, they’ve breached their duties. See, e.g., Probate Code §§ 16040-16042. This can occur in a number of different ways. A person might directly steal from the trust. They might pay themselves too much to administer the trust. They might waste money or try to change the terms of the trust to benefit people or groups besides the trust beneficiaries. Any of these things can open the trustee up to a civil action for breach of their fiduciary duties. The original settlor, another trustee or a beneficiary of the trust may petition the court concerning the affairs of the trust, seek removal of the trustee and other remedies available under the law.  Probate Code § 17200.

Removal And Other Remedies

In such a civil action, California law provides a variety of remedies for those who have been injured as a result of a trustee’s breach of fiduciary duty. California Probate Code Section 16420 allows an injured party:

(1) To compel the trustee to perform the trustee’s duties.

(2) To enjoin the trustee from committing a breach of trust.

(3) To compel the trustee to redress a breach of trust by payment of money or otherwise.

(4) To appoint a receiver or temporary trustee to take possession of the trust property and administer the trust.

(5) To remove the trustee.

(6) Subject to Section 18100, to set aside acts of the trustee.

(7) To reduce or deny compensation of the trustee.

(8) Subject to Section 18100, to impose an equitable lien or a constructive trust on trust property.

(9) Subject to Section 18100, to trace trust property that has been wrongfully disposed of and recover the property or its proceeds.

The Probate Code also expressly allows injured parties to pursue any other remedies available under California law, including where the victims are seniors all remedies available under the California Elder Abuse and Dependent Adult Civil Protection Act (“Elder Abuse Act”), Welf. & Inst. Code § 15600 et seq.  The abusive trustee, and anyone assisting him or her such as an attorney, may be liable for financial elder abuse as defined under the Elder Abuse Act.  Cal. Welf. & Inst. Code 15610.30.  Under that statute, the court awards mandatory attorneys’ fees and costs to the injured senior under certain circumstances. Cal. Welf. & inst. Code § 15657.5. The senior may also be entitled to extra damages in certain instances.

Whether you are a senior or not, always appoint as trustee someone you trust completely.  A trustee has broad authority over the assets placed in the trust.  California law holds that trustee to the high standard of fiduciary duty with respect to those assets.  If the trustee breaches that trust, the injured party should seek counsel in pursuing all available remedies against any trustee who has breached that duty.

Contact Us

If you or a loved one has been a victim of a breach of fiduciary duty by a trustee in San Francisco or elsewhere in California or, contact Ingrid Evans s at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our toll-free number is 1-888-50EVANS (888-503-8267).

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