estate lawyer when family trust violated

by Prof. Raymond Reichert 3 min read

If you suspect that a family member in a fiduciary role is concealing information, commingling funds, misappropriating funds, or acquiring funds by coercion, deception, or theft, contact a fiduciary abuse attorney right away to protect your inheritance while it lasts.

Full Answer

How did the trustee violate the terms of the trust?

Second, the trustee violated the terms of the trust and his fiduciary duty by knowingly and intentionally failing to make prudent investments, as well as failing to disclose his actions to the beneficiaries.

What is an abuse of trust in a will?

Abuse of Trust: Breach of Fiduciary Duty by the Trustee Abuse of trust is considered a breach of fiduciary duty by the trustee of a will or estate. Abuse of trust most often occurs In circumstances where a trustee’s finances are mingled with the estate or if there is a conflict of interest.

Can a trustee be liable for an abuse of trust?

However, if the evidence seems to show that the person didn’t act with reasonable care, skill, or prudence, he or she may be liable. Typically, an abuse of trust case is brought against a trustee by one of the beneficiaries, since they are the ones who suffer at the hands of his mistakes.

Can a trustee’s own finances be mingled with the estate?

The trustee’s own finances are mingled with the estate (this is not uncommon, given that the trustee is sometimes a family member; however, clear records must be kept and the trustee must make every effort to create a distinction between his funds and those of the estate; if this is not done, it constitutes a breach.


When a trustee fails to act properly this is called?

When a trustee fails in his or her duties, it is referred to as breach of fiduciary duty. Breach of fiduciary duty can come in many forms.

What happens when there is a breach of trust?

When a trust breach occurs, a probate court can impose serious consequences and penalties, including suspension or removal as trustee or being surcharged – probate for being ordered to pay money – for damages caused by the breach. In rare and extreme cases, trustees can even face criminal charges.

Can a family trust be broken?

Typically, the only way to “break” a trust is when the creator of that trusts makes to decision to dissolve the trust. If you have established a living trust for your benefit and the benefit of your beneficiaries and heirs after your death, the heirs and beneficiaries cannot break your trust.

Can a trustee be sued for negligence?

Negligence can constitute a breach of fiduciary duty because trustee misconduct can include a range of conduct, both intentional and unintentional (or negligent), committed by a trustee that results in loss to trust assets. Trustee malfeasance can be grounds for removing a trustee or filing a suit against them.

What are the charges for breach of trust?

Penalties for breaching trust They may also face a prison term of up to 14 years. The Code also prohibits the retention of the proceeds of crime. The focus of the sanction for criminal breach of trust is denunciation and general deterrence. A judgment from the Court of Quebec sums that up well.

Who can sue for breach of trust?

In general, a beneficiary under a trust can assign his interest under it. If he does so, the assignee can sue the trustee for a breach of trust committed before the assignment: Scott on Trusts , ss. 132-132.2.

Can trusts be challenged?

A trust can be contested for many of the same reasons as a will, including lack of testamentary capacity, undue influence, or lack of requisite formalities. The beneficiaries may also challenge the trustee's actions as violating the terms and purpose of the trust.

Can a trust be overridden?

Key Takeaways. Revocable trusts, as their name implies, can be altered or completely revoked at any time by their grantor—the person who established them. The first step in dissolving a revocable trust is to remove all the assets that have been transferred into it.

What would make a trust invalid?

Some of the most common reasons trusts are invalid include: Legal formalities were not followed when executing the trust instrument. The trust was created or modified through forgery or another type of fraud. The trust maker was not mentally competent when they created or modified the trust.

Can beneficiaries take action against trustees?

If, after reviewing the documentation, the beneficiaries consider that a trustee is acting improperly and failing in his duties as a trustee, a beneficiary can take legal action to bring a claim for breach of trust.

How is a trustee held accountable?

Trustees must follow the terms of the trust and are accountable to the beneficiaries for their actions. They may be held personally liable if they: Are found to be self-dealing, or using trust assets for their own benefit. Cause damage to a third party to the same extent as if the property was their own.

Can a trust be prosecuted?

The trustees, in their official capacity, can, however, sue or be sued. All the trustees must join in suing and all must be sued (Mariola v Kaye-Eddie case of 1995). Therefore when a trust is sued or sues, the names of all trustees, rather than the trust itself, are to be sited in pleadings.

What Can You Put into a Family Trust?

Not every asset can or should go into a family trust. Here are several assets that can:

How Can You Minimize Family Conflicts with the Trust?

No matter how hard a grantor may try, conflicts and disputes over money within a family may still happen. There are several things a grantor can do to minimize the risk of conflict with relatives.

Do I Need a Lawyer to Create a Family Trust?

There are numerous factors that determine the best way to plan an estate. A family trust may help a grantor avoid probate taxes, manage family conflicts, or continue to have some control over the estate even after the grantor’s death.

Why is it so hard to determine when a trustee has an abuse of trust?

It can be difficult to determine exactly when abuse of trust has taken place, simply because the trustee’s position does allow for him or her to make judgment calls to a certain extent; this means not all of the rules are cut and dried.

What to do if trustee is abusing your estate?

Your attorney can help you to gather evidence and take the proper action against a trustee so he does not do any further damage to the assets of the estate.

What is abuse of trust?

Abuse of trust is considered a breach of fiduciary duty by the trustee of a will or estate. Abuse of trust most often occurs In circumstances where a trustee’s finances are mingled with the estate or if there is a conflict of interest.

How long does it take to file a breach of trust?

If a beneficiary wants to file a breach of trust against a trustee, he or she must generally do so within one year of the incident’s original documentation. If the court agrees that the breach took place, in most cases a third party will step in and ensure that the beneficiary’s claim is handled properly and he or she is given what he is entitled to have according to the will or trust. Depending on the nature of the breach and whether or not it can be clearly proven, the trustee may also be subject to removal from the position and ordered to pay fines and/ or compensation to any beneficiaries injured by his or her actions. In addition, a beneficiary may sue a trustee personally in their capacity as the trustee in probate court.

When can't you trust the trustee?

If the trustee doesn’t perform his or her duties as stated, i.e. if he or she acts in a way that is disloyal or careless and constitutes an abuse of trust regarding the wishes of the estate holder, then he or she can be considered in breach of fiduciary duty.

Can a trustee profit from a trust?

A trustee must not profit from the trust, borrow from the trust, or any number of other transactions that would benefit the trustee personally. The trustee fails to stop a co-trustee or other responsible party from acting in a way that constitutes a breach of trust; any co-trustees are jointly responsible for the behavior of all.

Who is a trustee?

A trustee may be a person or an organization that is qualified to handle the distribution of the estate according to the written wishes of the individual upon his or her death. A trustee can, in fact, be anyone specified by the deceased, from a lawyer to a financial investment company to a family member or friend.

What is an estate lawyer?

An estate lawyer is trained in matters related to passing on your assets after you die, and planning for situations where you can no longer care for yourself. They are experts in wills, trusts, and your local probate process. Some estate lawyers may also have specialties, like planning the succession of a business.

How to leave assets to stepchild?

To leave assets to a stepchild, stepparent, or half-sibling, consider working with an estate lawyer. Most people could benefit from working with an estate planning attorney, but it may not be necessary (and you may not want to pay for it) in many situations. On the other hand, people in certain situations may need the help ...

Can you pass on your estate if you aren't survived?

This only happens if you aren’t survived by a spouse or child, but a solid estate plan will protect your assets and allow you to pass on as much of your estate as possible. If this is your situation, you may want to look for an estate lawyer who specializes in elder law. You want to set up an irrevocable trust .

Can you pass on assets to a business partner?

You have out-of-state property or assets . Passing on assets can get tricky if they’re crossing state boundaries, since two states may have different tax codes or other legal requirements for how to transfer an asset.

Can you bequeath assets to someone who isn't a citizen?

You have foreign property or assets . You’re planning to bequeath assets to someone who isn’t a citizen . You could also run into issues if you plan to name an executor who isn't a legal U.S. resident. Certain tasks, like getting a tax ID to open an estate account, may not be possible for nonresidents.

How does a trustee violate his fiduciary duty?

Second, the trustee violated the terms of the trust and his fiduciary duty by knowingly and intentionally failing to make prudent investments, as well as failing to disclose his actions to the beneficiaries.

What happens if a trustee fails in his fiduciary duties?

If a trustee fails in his fiduciary duties or violates a term of the trust, he is considered in breach. For example, assume the trust instrument specified that the trustee was to make prudent investments with the trust property to ensure that sufficient funds existed to pay for the beneficiaries' college education.

What happens if a trustee breaches his fiduciary responsibilities?

If a trustee breaches his fiducuary responsibilities or the terms of the trust, the beneficiaries have the right to petition the court to remove the trustee and appoint a replacement trustee. The process for removal and the remedies available to the beneficiaries are outlined in state law, and can vary.

What is the duty of a trustee?

A trustee duly appointed to oversee an irrevocable trust must follow the express direction provided by the creator as specified in the trust document. In addition, the trustee has an independent duty to the beneficiaries to manage the trust responsibly and act with their best interests in mind.

What happens if a trustee invests in his own business?

If the trustee instead secretly invests the trust assets in his own struggling business resulting in a huge loss and insufficient funds to cover the education expenses , this action could result in multiple breaches. First, the trustee engaged in self-dealing by placing his interests above that of the beneficiaries.

What is irrevocable trust?

An irrevocable trust is a trust that cannot be withdrawn by the creator, often referred to as a grantor or settlor. The creator effectively parts ways with the trust once the property, known as the corpus, has been transferred into the trust and the trust document has been executed. Once the trust is established, an appointed trustee oversees the administration of the trust and is in charge of disbursing the funds to the beneficiaries according to the terms of the trust.#N#Read More: How to Add a Co-Trustee of Irrevocable Living Trust

Failure to Provide Competent Representation

When you choose a lawyer, you are assured that they have the skills and competency to perform the planning services that will make your succession better, if not the best.

Disclosing Confidential Information to Third Parties

When you meet with the lawyer, let him assure you that they can keep your information confidential, especially that which is sensitive. When you sign an agreement with the lawyer, be sure that they will stick to the script and keep the info secret at all times.

Representing Multiple Beneficiaries

You might be forced to do away with your lawyer if you realize they are serving other family members.

Failure to Ensure Legal Capacity

When it comes to estate planning, the lawyer needs to put into consideration the sick, aged, or mentally impaired clients because their judgment is different.

Failure to Document Everything

When you meet with a lawyer for the first time, it is upon the lawyer to put down everything in writing. The first document that needs to be drafted is an engagement letter, which outlines what will happen and how it needs to happen. This letter talks about, among other things:

The Bottom-line

Not all estate planning lawyers are equal. Some work professionally, while others just care about money. Make sure you work with a lawyer that understands your needs and is ready to make your plan successful without going against the ethical considerations.

What is a trustee and personal representative?

Trustees and personal representatives are fiduciaries who must observe a standard of care in the delegation of their duties. Failing or neglecting to manage assets with utmost care and professionalism can result in a lawsuit for breach of trust or breach of fiduciary duty.

Can an estate be used to fund a defense?

Although the probate code does not have a similar rule for personal representatives, generally estate assets are not used to fund a defense because, if defense of the claim is unsuccessful, the judge could order the attorney who received the estate assets to return them to the estate.

Can a fiduciary be removed from a will in Florida?

Failure to manage assets in accordance with the terms of the will or trust and Florida law can result in the fiduciary being removed and being held personally liable for damages. The terms of a trust or will cannot eliminate a fiduciary's duty of care, including the requirement that they must account to the beneficiaries.

Can a trustee defend a breach of fiduciary duty?

For instance, the trust code does not allow a trustee to automatically use trust assets to defend a breach of fiduciary duty claim.

What is a trustee in a lawsuit?

This article provides a primer on lawsuits regarding the mismanagement of trust funds. A trustee has significant authority over the management of a trust’s assets. Accordingly, the trustee has numerous legal duties and obligations. The law places a fiduciary duty on the trustee, meaning the trustee must place the interests ...

Why do trustees want to prolong legal actions?

For example, a trustee may wish to prolong certain legal actions in order to recover more of a fee under the terms of a trust . However, beneficiaries are entitled to a full accounting of actions, and if a trustee attempts to hide actions, it is a good warning sign that all is not as it should be.

What is the fiduciary duty of a trustee?

The law places a fiduciary duty on the trustee, meaning the trustee must place the interests of trust beneficiaries first when making decisions regarding the management of a trust. A trustee cannot commit fraud, fail to account for actions taken on behalf of the trust, and otherwise hide assets, inhibit distributions, ...

What is the highest burden the law places on an individual?

Still, a fiduciary duty is a high standard – the highest burden the law places on an individual – and a failure to act as a fiduciary can lead to legal action.

Can a trustee predict the future?

Of course, a trustee cannot necessarily predict the market or future financial performance of assets. In addition, a trustee does have some leeway to make judgment calls regarding the distribution of trust assets.

Is legal action beneficial?

As with many issues in the law, whether or not legal action is beneficial depends on individual circumstances and the goals of the person bringing the claim. Legal action by the beneficiaries may result in several outcomes, depending on the circumstances surrounding the litigation. A beneficiary may:

Can a trustee be removed from a trust?

If not, the person or entity named the trustee can be removed. In some cases, a trustee may also illegally dispose or divert assets in the trust, for selfish reasons. Trustees can also be removed if there is a conflict of interest or undue influence has occurred.

What happens if a trustee fails to manage assets?

If a trustee, executor, or power of attorney agent is failing to properly manage assets, leveraging resources for their own benefit, or their actions seem to be in any way motivated by personal gain or for the gain of anyone other than the beneficiaries, a breach of fiduciary duty should be suspected. In such a case, you should contact an estate ...

What to do if you suspect a fiduciary abuse?

If you suspect that a family member in a fiduciary role is concealing information, commingling funds, misappropriating funds, or acquiring funds by coercion, deception, or theft, contact a fiduciary abuse attorney right away to protect your inheritance while it lasts.

What is breach of fiduciary duty?

A breach of fiduciary duty occurs when a fiduciary acts unreasonably, in a manner that does not mean the standard of what a reasonable fiduciary should do in the same situation, all things considered. A breach can arise from a failure to make assets profitable, also known as waste, or from failing to avoid conflicts of interest, ...

Why is it harder to prove that a fiduciary has crossed a legal or ethical line?

When a fiduciary is empowered to use discretion in this way , it becomes harder to prove that they have crossed a legal or ethical line. In other words, just because the beneficiaries don’t like a fiduciary’s decision doesn’t mean the fiduciary has committed abuse or there is a fiduciary breach.

What is the highest legal duty one party can owe another?

The fiduciary designation represents the highest legal duty one party can owe another. The law recognizes that, with great power, comes great responsibility. As a fiduciary, a trustee or executor has a duty to: Treat beneficiaries with care and respect. Act reasonably and fairly.

What are fiduciary breaches?

Fiduciaries are often granted broad powers over estate funds and assets, and may take advantage of their trusted position for personal profit or gain. If you suspect that you or a loved one are a victim of a fiduciary breach or abuse, or you’re concerned you may be accused of the same, read more.

Why is fiduciary duty important for elderly?

A fiduciary for an elderly person is therefore in a heightened position of responsibility, because the person they are acting on behalf of may lack the ability to advocate for — or even understand — their own interests. Examples of financial elder abuse abound.