Turn to Our Skilled Los Angeles Trust Attorney for Help
The law can be complex and difficult to understand, especially when it comes to trusts. These documents help grantors manage and distribute their assets to beneficiaries.
A proper trust can avoid estate taxes and help manage the inheritance of beneficiaries that may not be able to manage these assets themselves. For that reason, someone must manage the trust. Those who manage a trust have an important responsibility to ensure the grantor’s wishes. If that trustee does not adhere to those responsibilities, it may be time to consult a Los Angeles trust attorney to file a breach of trust claim.
At The Aslanian Law Firm, PC, we understand the importance of protecting the wishes of a grantor. Dire consequences can result if a trustee fails to meet their fiduciary responsibilities. A son with mental disabilities could lose assets meant to support him, or a niece’s college funds could disappear.
Our attorney, Greg Aslanian, wants to help protect you from this kind of negligence. Here are four key elements you need to know about breaches of trust.
What Is a Trust?
In order to understand a breach of trust, you should first understand what a trust is.
A trust is a legal document that allows a trustee to hold assets for a beneficiary or beneficiaries. This allows them to control which beneficiary gets what asset and when they can have it. The trustee is typically a neutral third party, who then owes the beneficiaries certain legal duties. He or she is responsible for protecting the assets outlined in the trust and distributing them according to the wishes of the grantor.
Trusts have many uses such as:
- Replacing wills, which allows estates to avoid probate and distribute assets to beneficiaries faster.
- Offering more control over wealth than a standard will, keeping the division of assets private and outside the courtroom.
- Managing the affairs of children who are either too young to manage their assets or do not have the capacity to do so.
- Managing the grantor’s assets while they are still alive. This comes in handy if a person becomes unable to manage their assets due to sickness or injury.
- While trusts have many uses, a breach of that trust can complicate just about everything—including your family’s relationship.
What Are the Trustee’s Fiduciary Duties?
Because trusts are such important documents, trustees have a heavy amount of responsibility from the get-go. Those responsibilities include a duty of care, a duty of impartiality, and a duty of loyalty.
- Under their duty of care, trustees must carefully manage the finances and assets outlined in a trust. They must act as a reasonably prudent investor.
- Under their duty of impartiality, trustees of documents with multiple beneficiaries must administer assets in a way that does not show preference to one beneficiary over another.
- Under their duty of loyalty, trustees must always act in the best interest of the trust, rather than working toward anyone else’s agenda — no matter what it may be.
Breaking these obligations is often what leads to a breach of trust.
What Qualifies as a Breach?
There are many, many circumstances that qualify as a breach of trust, including:
- Allowing assets to go to waste
- Regularly taking losses through poor management
- Failing to account for assets
- Mixing personal funds with trust funds
- Allowing other trustees or beneficiaries to act inconsistently with the intent of the trust
- Borrowing from a trust or benefitting from a trust as a trustee
- Allowing an outside influence to affect trust-related decisions, such as by accepting a bribe
When faced with these problems, those impacted by a trust may choose to file a legal claim against the trustee in question. Similar to personal injury lawsuits, you must prove:
- There was, in fact, a fiduciary relationship between the trustee and yourself;
- That the trustee breached their duty to you (and other beneficiaries, should you choose to include them); and
- That you experienced a financial injury because of the breach.
A popular example is a trustee that gambled away inheritance money instead of transferring it to beneficiaries. This is an extreme breach of trust that will almost certainly require compensation.
How Do I Recover Damages?
Recovering the losses that resulted from a breach of trust can be difficult, but not impossible. For example, a judge can order the return of certain missing assets to the trust. However, funds spent on nonmaterial things such as vacations are not as easily restored. To recover from such actions, the judge may rule in favor of a money judgment.
Three possible ways to recover damages include:
- A Constructive Trust – Under this option, misused funds that are traceable to a material purchase may force the court to issue a constructive trust that will recover those assets.
- A Surcharge – In this case, the court may order a reduction in the trustee’s inheritance share or fees from the trust. This will match the amount lost or mismanaged by the trustee.
- A Money Judgment – When there is no other way to recover the misused or mistreated assets or funds, the trustee will have to use personal assets to pay the amount and compensate the trust.
Contact Our Skilled Los Angeles Trust Attorney
Do you feel an act by a third-party has been inconsistent with the terms of your trust agreement or the law of trusts? Contact a Los Angeles trust attorney you can rely on at The Aslanian Law Firm by calling (626) 345-7210.