Trustee Defense

Do you know someone trying to sue a trustee of a trust? You might be on the receiving end of a lawsuit, or you might be the one filing one against a trustee. Either way, knowing the steps involved in removing a trustee can help you secure a more favorable outcome.

Top Reasons Why Beneficiaries Ask for a Trustee's Removal

Every trust requires at least one trustee, and this position carries a significant amount of responsibility. In the event that a trustee is unable to effectively carry out the duties specified in a trust, it's possible to have said individual removed from his or her obligations. Trustors and beneficiaries have the option to dismiss trustees for various other reasons as well. Some of the most common reasons beneficiaries ask for a his removal include:

• Breach of fiduciary duty: Trustees take on the legal ownership of a trust and any trust assets, which can include real estate and money. They manage these assets for the beneficiaries of the trust, meaning they have an obligation to always act in a way that is in the beneficiaries' best interests and in accordance with the trust's provisions. When a trustee fails to adhere to all trust terms, the beneficiaries have a legal right to petition and sue the trustee for breach of fiduciary duty.

• Mismanagement or neglect of assets in the trust: The trustee has a legal responsibility to protect the trust's assets from mismanagement, mishandling, squandering and abuse. If he is negligent or incompetent and violates their duties, the beneficiaries may ask to have the trustee removed.

• Self-dealing: A trustee cannot capitalize on his or her control of a trust to gain personal benefits. A probate court can and will quickly step in and remove a trustee in the event of proven self-dealing. However, when trustees come in the form of large financial institutions, self-dealing is permissible under law as long as all beneficiaries have signed a conflict-of-interest waiver.

• Verified good cause: When a trustee and one or more beneficiaries can't agree on the distribution of trust assets, it's possible to sue a trustee of a trust and have him or her removed. In this type of situation, the beneficiary must provide a verified good cause as to why he or she is petitioning the court to remove the trustee. Any verified reason must be logical and reasonable in order for the court to grant the removal.

• Animosity toward beneficiaries: Discord between a trust's trustee and beneficiary can lead to legal action. However, not all forms of antagonism will result in the removal of a trustee. Following the approval of a removal petition, a hearing will take place. A judge will evaluate whether or not the animosity warrants the removal during the hearing.

What's Involved in a Trustee Removal Process?

All removal processes begin with the filing of a petition by a trustor, co-trustee, beneficiary or probate court. In addition to petitioning for removal, you can sue the trustee for monetary damages as well. A judge will only agree to remove a trustee and grant a monetary damage award if you establish a compelling case for doing so. The burden of proof is on the petitioner to prove that the trustee breached the trust agreement or their fiduciary duties. The evidence provided to judges during removal cases must come in the form of testimony and documentation. All submitted forms of evidence must follow the court's Rules of Evidence and Rules and Procedures.

Many removal cases involve gathering evidence and testimony from multiple entities, including lawyers, accountants and witnesses, through interrogations and subpoenaed paperwork. A formal accounting is key to the removal process because, during the formal accounting, a trust defense attorney can:

• Subpoena evidence;

• Interview witnesses;

• Analyze and verify records.

Judges often give trustees the opportunity to change their negative behaviors and remediate any damages before granting a removal request. If the trustee doesn't make appropriate changes, a hearing takes place in which a trust defense attorney can present all relevant evidence, and the judge will make a final decision.

What to Expect When Working With Citadel Law

We receive calls and inquiries all the time asking “Can a beneficiary sue a trustee?”. 

The short answer is yes. The long answer is yes, but you must meet several stipulations to get a trustee removed. If you're suing a trustee, having a qualified trust defense attorney from Citadel Law can help you win your case. If you're getting sued, it's still important to contact an experienced trust defense attorney from Citadel Law. The courts seldom look the other way on trustee misconduct, so having an experienced attorney on your side is crucial if you want to keep your trusteeship.

Money conflicts and legal issues are common sources of tension in families. Citadel Law Corporation provides comprehensive legal services in estate planning to a diverse clientele. Among the many estate planning services we provide are consultations on estate and gift tax planning, trust management, and the creation of revocable living trusts. For over 30 years, Citadel Law has helped clients navigate the complex estate planning rules of California. Our mission is to assist individuals like yourself in reaching fair and equitable solutions to all financial conflicts, including those involving trustee removals.