When should you suspect that a trustee is in breach?

If you are a beneficiary to a trust, you have a legal right to expect that you receive the assets according to the trust instrument. If the person who left you the trust is no longer living, tensions may run high with the trustee. Perhaps you are concerned about what they are doing, or you might wonder if the trustee is in breach of fiduciary duty.

If you are in this situation, what should you do? The California Probate Code sections on trusts is extremely complicated and may leave you with many questions about your trust. For example, how can you determine if there is illegal or unethical behavior happening?

4 ways to identify is a trustee is in breach

While there is no set way to determine if a trustee is mishandling the assets you are entitled to, there may be some visible signs, including:

• Delayed or incomplete payments: A trust should have specific directions regarding the timing and number of payouts from the trustee to the beneficiary. If the payments are arriving late or are less than what they should be, this could be one of the first signs of a possible problem.
• Unauthorized or unusual investments: If you see that the trustee is making strange or unauthorized investments, there could be a conflict of interest or breach of duty at play.
• Poor record keeping: One of the primary responsibilities of a trustee is to keep solid, consistent records. If the trustee’s records are incomplete, inaccurate or sloppy in any way, this could signify larger problems.
• Theft: It might be obvious to some, but it’s important to state. If you know or have good reason to believe that the trustee has been stealing or co-mingling funds, this is a direct breach of his or her fiduciary duty.

What can you do if you discover illegal or unethical conduct?

If you have good reason to believe your trustee is in breach of their duty, the first step is to call a lawyer.  A potential next step could be an order to comply and possibly request the removal of the trustee. The most important thing you can do is to protect your financial interests. Even if the trustee is a family friend or someone you care deeply about, you need to protect yourself, your assets and your future.