Navigating Trust Fraud Claims

When dealing with loved ones passing, it is best to prioritize yourself and your family. Grieving is hard; worrying about your inheritance shouldn’t be a part of the process. That is why The Grossman Law Firm (TGLF) has been aiding our clients for over twenty years, securing inheritances and informing them of their rights. 

The emotional weight of the probate process after your loved one passes can feel overwhelming. For many, this process is made even more difficult by the possibility of navigating trust fraud claims. When a trust document is compromised—whether through manipulation, forgery, or mismanagement—it creates additional stress during an already trying time. Suppose you find yourself involved in a trust dispute. In that case, it is essential to understand the nature of trust fraud, how it can occur, and how the California state’s legal system can offer remedies.

In this guide, The Grossman Law Firm will explore how trust fraud works, how to identify it, and how to protect yourself and your loved ones from its effects. Our goal is to provide clarity during an uncertain time. TGLF acknowledges that this is more than a legal issue—it’s deeply personal.

What Is Trust Fraud?

Trust fraud involves intentionally misusing or manipulating a trust, typically by a trustee or another individual in a position of responsibility. It can take many forms—fraudulent alterations to trust documents, misappropriation of assets, or breaches of fiduciary duty. Unfortunately, trust fraud is a reality for some families, who are left grappling not just with the emotional weight of loss but with the complexities of legal battles that threaten to undermine the wishes of the deceased.

Trust fraud is a serious offense in California, and navigating this process is not straightforward. Understanding the legal implications and emotional impact of such claims is essential.

How Trust Fraud Occurs

Trust fraud can occur in various ways, often involving one or more individuals who seek to exploit their relationship with the trust maker (the decedent) or the beneficiaries. Understanding how trust fraud typically unfolds can help you recognize potential issues early.

Undue Influence

Undue influence is one of the most common ways fraud enters the process. A person in a position of trust—such as a family member or caregiver—may manipulate the decedent to change the terms of their trust. That could include altering beneficiaries or asset distributions to favor themselves. Sometimes, the influence may be subtle, taking place over time, making it harder to identify until after the trust maker has passed.

Forgery or alteration

Another form of fraud involves the forgery or alteration of trust documents. It is a serious violation, as it often results in entirely new documents that don’t reflect the decedent’s true wishes. That could mean adding or removing beneficiaries, changing the distribution of assets, or even entirely revoking the original trust. Forgery or document tampering is especially problematic because it may not be detected until the trust is administered, often after the decedent’s death.

Misappropriation of trust assets

Another common type of fraud is the misappropriation of trust assets. In these cases, a trustee may unlawfully take or mismanage assets that belong to the trust. Trustees have a fiduciary duty to act in the best interests of the beneficiaries. If they breach this duty, they may be committing fraud. It could include diverting funds for personal use, selling trust assets without proper approval, or misreporting the value of trust holdings.

Breach of duties

Lastly, there are situations in which trustees fail to carry out the trust’s terms correctly. That might involve distributing assets in a way that contradicts the decedent’s explicit instructions or failing to honor specific wishes laid out in the trust document. Although these actions might not always be deliberate, they can still lead to litigation if they harm the beneficiaries.

Navigating Trust Fraud Claims

If you believe trust fraud has occurred, certain elements must be proven for the claim to succeed in California. Understanding these legal requirements can help you assess whether your suspicions have legal standing.

The need to prove intentional misrepresentation or deception is at the core of a trust fraud claim. It is also the most challenging element to establish, as fraud often involves subtle and calculated manipulation. You must show that the defendant deliberately misled or deceived the decedent, beneficiaries, or other parties for personal gain.

You must also demonstrate that the trust documents were either falsified or the assets were misappropriated in a way that contradicts the terms outlined in the trust. Suppose a trustee or another individual altered the trust document or engaged in fraud. In that case, this can be a foundation for your claim.

Further, showing that you suffered harm due to the fraud is essential. Harm could include financial loss, emotional distress, or the deprivation of assets you were rightfully entitled to. The damage caused by the fraud must be apparent, and you must provide evidence to verify your claims.

Finally, you must establish causation, demonstrating that the fraudulent actions directly caused the harm you experienced. If the fraud had not occurred, you must show how the outcome would have been different, whether that means receiving a greater share of the estate or not being subjected to undue financial or emotional distress.

California Laws Governing Trust Fraud

California’s legal framework strongly protects beneficiaries who fall victim to trust fraud. The state’s Probate Code governs most matters related to trusts, including trustees’ duties and beneficiaries’ rights.

Under Section 16000 of the Probate Code, trustees must administer the trust by the terms set out by the trust maker.

Beneficiaries can take legal action to correct the mismanagement. Or even remove the trustee if they breach this duty by committing fraud. Trustees have a fiduciary responsibility to act with care, loyalty, and good faith. If they violate this duty, they may be liable for damages.

California law also provides straightforward remedies for those whose fraudulent actions have harmed them. Section 16420 of the Probate Code allows removing trustees if they are found guilty of fraud or misconduct. That is an important safeguard, as it ensures that beneficiaries are not left vulnerable to the actions of dishonest or unscrupulous trustees.

In addition to these civil remedies, California also recognizes the criminal aspects of trust fraud. The Penal Code addresses offenses like forgery, theft, and fraud, which can carry significant penalties, including fines and imprisonment. Individuals involved in trust fraud may face civil and criminal consequences in certain circumstances.

Navigating Trust Fraud Claims: Red Flags to Watch For

While trust fraud is often complex, several warning signs may suggest something is wrong. If you notice any of the following red flags, it may be time to investigate further:

• Any unexplained or sudden changes in the trust documents should be treated with suspicion. If the decedent made substantial alterations to the trust just before their death, or if you notice inconsistencies in the documents, this could be a sign of forgery or undue influence.
• Be wary of unusual behavior from trustees or beneficiaries. A trustee who is secretive, uncooperative, or delaying distributions may be hiding something. Similarly, beneficiaries who suddenly become aggressive, demanding, or controlling could try to manipulate the situation for their benefit.
• Asset distribution discrepancies are another major red flag. If the distribution doesn’t align with the terms laid out in the trust, or if there are significant gaps or missing assets, it could indicate mismanagement or misappropriation of funds.

Steps to Take if You Suspect Trust Fraud

If you suspect trust fraud, taking action immediately is critical. Start by gathering evidence. It might include obtaining a copy of the original trust document, comparing it to any altered versions, or reviewing financial records to track asset movements. If you need help getting a copy of the trust document, check out our article, “How to Get a Copy of a Trust,” for more information on your rights and who is entitled to a copy of a trust document in California.

The next step is to consult with a qualified trust litigation attorney. These professionals specialize in trust disputes and can guide you through the legal process. An attorney will help you understand the strength of your claim, gather the necessary evidence, and take the appropriate legal steps to protect your interests.

If you decide to proceed with a legal claim, your attorney will help you file a petition with the court. This petition may seek to invalidate any fraudulent changes made to the trust, remove a dishonest trustee, or recover assets unlawfully taken.

Legal Remedies for Trust Fraud in California

California law offers several remedies when trust fraud is proven. If fraud has occurred, the court may remove the trustee and appoint a new one. This action is critical to ensure that the trust is administered correctly moving forward.

In cases of misappropriated assets, the court may order restitution, requiring the defrauding party to return the stolen property or funds. Additionally, you may be entitled to compensatory damages to cover financial losses, legal fees, and emotional distress caused by the fraud.

Do you need a probate attorney? 

Trust fraud is a deeply troubling issue that can arise in the wake of a loved one’s passing, complicating an already difficult time. However, California law provides several mechanisms to hold perpetrators accountable and protect the interests of beneficiaries. If you suspect fraud has occurred, acting swiftly and consulting with an experienced California probate attorney who can guide you through the process is crucial. While trust litigation can be a long and challenging road, protecting your rights and honoring your loved one’s wishes should always be the priority.

To ensure they follow their fiduciary duties, check out our complete Overview of California Trust Litigation on our website. If you have more questions about your rights as a Beneficiary and what you should know moving forward. 

Our law firm specializes in trust and probate law. The Grossman Law Firm assists trustees in fulfilling their duties and navigating legal complexities.

Our law firm specializes in trust and probate law and is here to help you navigate these complex issues. Contact us today for a consultation. Let us assist you in ensuring your rights are upheld, and your trust is managed prudently. Please call us at (888) 443-6590 or fill out our Get Help Now form below.