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Hi, this is Keith Davidson at Albertson & Davidson. In this video, we’re discussing trustee surcharge. How do you hold your trustee liable for the damages that they have caused to your trust estate?
The number one way that you hold a trustee liable is you have to go to court on a petition asking the court to order the trustee to pay damages back to the trust. That’s what we call a surcharge. And you’re allowed to ask for a surcharge for any harms and losses that the trustee has caused to your trust estate.
You usually start by filing a petition with the court asking the court to order a surcharge against the trustee. But you have to know what it is want to surcharge. So if you know that the trustee has caused damage by taking a specific act, and you know how much the damage the trustee has caused, then you can go straight forward, file your petition and ask the court to order the trustee to pay that back.
If, however, you’re unclear as to the damage that the trustee did, then you’re going to have to do a little bit more than that. And that comes in a couple of different way. One way is you could file a petition asking the court to order the trustee to account. So then the trustee has to do a formal trust accounting. And that essentially will become your roadmap for whatever the trustee surcharges will be. Because in that accounting, you should be able to see where the problems arose.
Also, using that accounting, you can start doing discovery, issuing subpoenas, getting bank records, getting financial statements, getting records from escrow companies. And you can start piecing together the information yourself and finding out where the damage occurred to your trust. Once you have that information, then you can ask the court to order the surcharge.
So it really depends on what information you have heading into the case. The more information you have, the more likely you are to go straight into the petition asking for a surcharge. The less information you have, you’re going to have to take the first step of becoming informed and then you can sue the trustee for surcharge.