What Happens If a Trustee Does Not Follow the Trust?

Key Takeaways
Understanding the Trustee’s Duty
Common Ways Trustees Violate the Trust
Legal Consequences of a Breach
Remedies for Beneficiaries
How The Grossman Law Firm Can Help
Related Resources
FAQ

Key Takeaways

Trustees must follow the trust’s written instructions and California law when managing and distributing assets.
Breaching fiduciary duties can result in personal liability, court removal, and repayment of losses.
Beneficiaries can petition the probate court for an accounting, suspension, or removal of a trustee.
California Probate Code §§16420–16440 provides legal remedies for losses caused by a trustee’s misconduct.
If you suspect a breach, contact a California trust litigation attorney right away to protect your inheritance.

Understanding the Trustee’s Duty

Under California Probate Code §§ 16000–16015, trustees have a fiduciary duty to manage trust property strictly in accordance with the trust’s terms and for the benefit of the beneficiaries. This means a trustee must:

Administer the trust in good faith.
Avoid self-dealing or conflicts of interest.
Keep beneficiaries reasonably informed.
Preserve, protect, and prudently invest trust assets.

When a trustee ignores or violates these duties, whether intentionally or through negligence, it constitutes a breach of trust.

Common Ways Trustees Violate the Trust

1. Mismanagement of Trust Assets

Trustees often breach their duty by making reckless investment decisions, failing to maintain real estate, or improperly using trust funds. Even well-intentioned but careless actions can create liability.

2. Failure to Distribute Assets

If a trustee delays or withholds distributions without a valid reason, they may be violating the trust. California law expects trustees to act diligently and without unnecessary delay.

3. Lack of Communication or Accounting

Trustees must provide beneficiaries with updates and financial accountings upon reasonable request. Failure to do so may justify a petition for court-ordered accounting or removal.

4. Conflicts of Interest

A trustee must act impartially and cannot favor themselves or any particular beneficiary. Selling trust property to themselves or to relatives without disclosure is a serious breach.

For a deeper look at how trustees can violate their obligations, see 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties.

Legal Consequences of a Breach

When a trustee does not follow the trust, California law provides strong remedies to protect beneficiaries and the estate.

Breach of Fiduciary Duty

A trustee who acts contrary to the trust or law breaches their fiduciary duty. The probate court can:

Remove the trustee
Compel repayment of trust losses
Void improper transactions
Surcharge the trustee (a court-ordered financial penalty)

Personal Liability

Under Probate Code §§16420–16440, trustees are personally responsible for losses caused by negligence, bad faith, or self-dealing. They may have to reimburse the trust from their own funds, even if they did not personally profit.

Civil and Criminal Exposure

Most breaches are handled civilly, but intentional misconduct, such as embezzlement or fraud, can also trigger criminal liability. Trustees can face restitution orders or criminal charges if they misuse trust assets.

Remedies for Beneficiaries

Request a Formal Accounting

Beneficiaries have the right to demand an accounting that details every dollar received, spent, and invested. If the trustee refuses, you can petition the court to compel them to do so.

Petition for Suspension or Removal

Beneficiaries may file a petition under Probate Code §15642 to remove a trustee who is failing to perform their duties, acting in bad faith, or causing harm to the trust.

File a Lawsuit for Breach of Trust

If the trustee’s conduct causes losses, beneficiaries can sue for breach of trust. Courts can order repayment, remove the trustee, and appoint a successor.

Seek Surcharge or Damages

Beneficiaries may request a surcharge, a financial judgment against the trustee for losses caused by their misconduct. Damages can include reimbursement for lost value, interest, and legal fees.

If you’re a beneficiary dealing with a trustee who isn’t following the trust, don’t wait. California law provides you with powerful remedies, but timing and documentation are crucial.

How The Grossman Law Firm Can Help

At The Grossman Law Firm, we represent beneficiaries and heirs across California in trust litigation and probate disputes. Attorney Scott Grossman has over two decades of experience holding trustees accountable for breaching fiduciary duties and ensuring beneficiaries receive what they’re owed.

If you believe your trustee has failed to follow the trust, we can:

Review the trust document and financial history
File petitions to compel accountings or remove the trustee
Pursue court orders to recover mismanaged funds

You don’t have to face this alone.

Call (888) 443-6590 or fill out our Get Help Now form.

Our Intake Specialists will evaluate your case at no cost.

Qualifying cases receive a Free Phone Consultation with Attorney Scott Grossman.

Related Resources

FAQ

What happens if a trustee ignores the trust terms?

The court can remove them, order repayment of losses, and appoint a new trustee to protect the beneficiaries’ interests.

Can a trustee go to jail for mismanaging a trust?

Yes, if the misconduct involves criminal acts such as fraud or embezzlement, criminal prosecution is possible.

What should I do first if I suspect a breach?

Gather documentation, avoid confrontation, and contact a California trust litigation attorney immediately to review your options.

How long do I have to take action against a trustee?

In California, the deadline depends on the type of claim. Beneficiaries generally have 120 days from receiving a “Notice by Trustee” to contest the validity of the trust. And three years from when they discovered (or reasonably should have discovered) the trustee’s breach to bring a breach of fiduciary duty claim. Because these timelines can overlap or be shortened based on notice and disclosure, it’s best to act quickly and consult with a trust litigation attorney as soon as you suspect a problem.

Originally Published June 24, 2024