Trust litigation is often necessary to settle disputes regarding the creation, administration or distribution of a trust. A grantor or settlor creates a trust to protect their family and estate. They name a trustee to manage the trust and distribute the assets to their beneficiaries. The trustee has a fiduciary relationship with the grantor and the beneficiaries. They must oversee the administration and distribution of the trust in good faith and with the utmost level of loyalty and honesty.
However, nefarious trustees abuse their position of trust for their own advantage and gain. They breach their fiduciary duty by undermining the integrity of the trust and robbing the beneficiaries of their rightful inheritance.
When does a trustee breach their fiduciary duty?
A breach of fiduciary duty involving estate matters is a civil cause of action in Florida. Any interested party, such as a beneficiary or grantor, can file a lawsuit against the trustee when they believe the trustee is breaching their duty. A trustee breaches their duty when they:
- Fail to maintain adequate trust records and documentation
- Misappropriate or embezzle trust assets
- Commingle or merge their assets with the trust assets
- Mismanage the trust and deplete trust assets
- Give unfair preferential treatment to some beneficiaries over others
- Engage in third-party dealings with conflicts of interest
Beneficiaries may even challenge the validity of the trust document if they believe the trustee obtained their position by exerting undue influence over the grantor.
The removal of a trustee does not exonerate the trustee
Interested parties may initiate legal actions to remove the trustee from their position. Proceedings for the removal of the trustee will not absolve them from liability. Under certain circumstances, the trustee who breached their duty may have to compensate the beneficiaries for depriving them of their fair share of the estate.
When a person chooses their personal representative, they believe that person will honor their wishes even when they are no longer alive. A trustee should always act in the best interests of the grantor and the beneficiaries the grantor entrusted them to protect.