Trustee misconduct occurs when a trustee fails to follow the rules of the trust or acts in a way that harms the beneficiaries. A trustee has a legal duty to manage the trust fairly, honestly and in the best interests of the beneficiaries.
When beneficiaries believe they aren’t, it can result in legal contests and disputes. What is trustee misconduct, and what can be done about it?
Examples of misconduct
Misconduct can take many forms. One of the most common issues is misusing trust funds, such as spending trust money for personal benefit or failing to keep proper records. Another example is favoring one beneficiary over another without justification.
Some trustees may also fail to communicate, keeping beneficiaries in the dark about important decisions or refusing to share financial information. Others might delay distributions without a good reason or make risky investments that lead to financial loss.
How misconduct affects beneficiaries
When a trustee acts improperly, it can result in lost assets, delayed payments or a breakdown in trust between family members. In some cases, the misconduct may go unnoticed for years, especially if the trustee has full control over records and decisions. This can make it difficult for beneficiaries to understand what has gone wrong until the damage is already done.
If there are signs of trustee misconduct, there are steps that can be taken to resolve the issue. Sometimes, problems can be addressed by requesting a full accounting or asking the trustee to step down. In more serious cases, it may be necessary to involve the courts to remove the trustee or recover lost funds.
The right approach depends on the nature of the misconduct and the structure of the trust. Seeking legal guidance will allow you to explore your options in detail.