Improper trustee actions have the potential to cause serious losses for the beneficiaries. The Tempe trust administration lawyers at Blake & Pulsifer, PLC can represent beneficiaries or trustees who have been accused of misconduct.

The law takes a trustee’s obligation extremely seriously. Between the fact that others rely on the trustee to perform their duties, the law imposes fiduciary obligations. If the trustee violates these duties, the beneficiary may take legal action in several ways. 

Potential trustee misconduct is a crucial legal matter that must be addressed immediately to recover the losses and potentially obtain other forms of relief. Speak to the trust administration attorneys in Tempe by calling Blake & Pulsifer at (480) 838-3000 to learn what actions you can take in this situation to protect your own interests.

What Are the Trustee’s Fiduciary Duties?

The trustee’s fiduciary duties include:

  • The duty of loyalty means that the trustee must place the interests of the trust ahead of their own. They must refrain from transactions that involve a conflict of interest unless that conflict is fully disclosed to the beneficiaries for them to make their own decision.
  • The duty of care requires the trustee to perform due diligence when they are managing the trust. Essentially, the duty of care equates to a prohibition on trustee negligence.

If you suspect that the trustee has violated their fiduciary duties, you can take the following forms of legal action in court.

Seek an Accounting of Trust Assets

You may have a suspicion that the trustee is not upholding their fiduciary duties, but you may not know for sure. Beneficiaries are able to file a legal action in court to seek an accounting. Once you have a full accounting of trust activities, you can get a better sense of how the trustee has been performing their duties and whether there is any wrongful action. You will be able to identify any mismanagement or fraud, and you will have the ability to trace the trust’s assets based on the accounting that is provided.

Request the Removal of the Trustee

You can petition the court to remove the trustee entirely when they have breached fiduciary duties. In that case, the court will appoint a successor trustee. Prior to the complete removal of the trustee, a court may temporarily suspend them while further investigating potential misconduct and reaching a final decision.

Seek an Injunction Against the Trustee

The court has the power to order the trustee to take certain actions or to refrain from doing something illegal. This is known as an injunction, and it is a form of equitable relief that plaintiffs seek in lawsuits. Although courts often prefer to grant monetary damages as opposed to an injunction, they may be more likely to do so in the context of a trust when the trustee’s actions pose imminent harm to the beneficiaries.

Sue the Trustee for Damages

Beneficiaries are able to sue a trustee for violation of fiduciary duties. They may seek damages directly from the trustee for the losses that they have suffered, including:

  • Compensation for the money lost due to the trustee’s wrongful actions
  • Discouragement of any profit that the trustee improperly earned
  • Restoring the diminished value of the trust

In some cases, the trustee has taken out an insurance policy, and their insurance company would pay for the damages. If there is no insurance to cover the damages, the trustee may be held liable out of their own pocket.

Request Rescission of Transactions

Rescission is another form of equitable remedy that a court may grant in the face of wrongful action. If the trustee has engaged in an improper transaction where there was an undisclosed conflict, or they have made improper distributions, you can petition the court to void the transaction. If the rescinded transaction resulted in losses to the trust, you can also seek damages from the trustee.

Contact a Tempe Trust Administration Law Firm

When there are questions about the propriety of a trustee’s actions, both the beneficiaries and the trustee need legal help. Schedule an appointment with a Tempe trust administration attorney at Blake & Pulsifer, PLC to learn more about potential remedies or to defend yourself against allegations of misconduct. You can make an appointment by visiting our website or by calling us today at (480) 838-3000.