- Disloyal Trustees = beneficiary abuse
Every Trustee has a duty of loyalty (California Probate Code section 16002). The duty of loyalty requires the Trustee to administer the Trust solely in the interests of the beneficiaries. That term “solely” really makes the point—there can be no other reason to act when administering a Trust other than what’s good for the beneficiaries. Seems obvious, I know, but not always practiced by Trustees.
Many Trustees think they can do whatever they want with the Trust assets, use whatever professionals they like, charge any amount of Trustee’s fees they like, or delay distributions when it benefits the Trustee to do so. Not so. Under the duty of loyalty, a Trustee must act solely in the interests of the beneficiaries.
A good example of failing the duty of loyalty test is hiring a close friend as a real estate agent to sell real property. Maybe this friend is not the best choice, or is paid an excessive fee, or lacks the experience to sell the real property in question, yet the Trustee uses them anyway. That’s a common example of disloyalty, and it can happen without the Trustee even realizing it is a breach of duty.
- What can you do about it?
When confronted with a disloyal Trustee, you have to take action to protect your rights as a beneficiary. Disloyalty is not just a breach of trust, its one of the worst forms of beneficiary abuse because it places the interests of the Trustee above the interests of the beneficiary. That’s the exact opposite of what is supposed to occur.
- The written objection
First, you need to voice your objection to the Trustee’s action in writing. If the Trustee is taking advantage of a situation, say something. It need not be anything formal, a simple email or handwritten letter will do. And it need not be confrontational or accusatory, you can simply tell the Trustee “I understand you are going to take this action, and I object to it because I don’t think it is fair to me for you to do so.” You can send this written objection on your own, no need for a lawyer here.
We are not naïve enough to think that a simple written objection will stop the Trustee in his or her tracks—it won’t. But what it does do is put the Trustee on notice of your objection. And you can use that written notice to your advantage later when you are in court to prove to the judge that you took the initiative to voice your objection and the Trustee acted over your objection.
Remember to help yourself in a Trust dispute you need to show you tried to act reasonably. That’s not a legal requirement, but it goes a long way to convincing a judge to help you because you first tried to help yourself and it failed to work.
- Seeking help in court
Second, you need to take action in court as soon as possible. When you have an abusive Trustee, things will not get any better (usually) without court intervention. The burden is on you to file in court and stand up for your rights.
For example, if the Trustee is about to sell real property to a friend in a below-market deal, then you have to stop it. And the only way to stop it is to file a petition for instructions in court and ask for an injunction. You have rights, but it is up to you to use those rights to protect yourself.
Many people ask “why is the burden mine to protect myself, isn’t the Trustee supposed to do the right thing anyway?” Yes, the Trustee is supposed to do the right thing, but when the Trustee fails or refuses to act appropriately, it’s up to you to bring those actions to the court’s attention. No one else is going to enforce your rights for you. The rights are there for you to use, but use them you must.
- Secure your future today
You can resolve your problem. A disloyal Trustee can be stopped and the Trust administered according to its terms. That’s not to say you will get everything you want from your legal case. Every case is different and every resolution is different. You will get some amount of fairness, justice, and resolution even if it’s not everything you wanted. There is an end in sight once you enter our court system.
Your goal should be to obtain the best resolution you can under the circumstances. Stop the Trustee’s disloyalty and reach a resolution that allows you to move on with your life.