Suing a trustee for a breach of fiduciary duty is the only way for a beneficiary to recover a loss in trust value or profits. When a beneficiary files a lawsuit, they can enforce the trustee’s duties and stop them from harming their share. If the damage is irreparable, the court can remove the trustee and order them to repay the amount lost.
The Law Offices of Kyle Robbins, PLLC understands the important role a trust serves in safeguarding your family’s wealth and legacy. It is the trustee’s responsibility to protect the trust assets. You deserve financial recourse for your loss when things go wrong. Let our lawyers help you protect your family’s future. Contact us today.
What Is a Trustee?
A trustee is a person who is responsible for managing a trust. The trustee will manage and invest the trust property and distribute it according to the trust’s terms. Trusts are an essential estate planning tool because the trustee can distribute trust property to a person’s beneficiaries outside of probate, which saves time and money. You may also use a trust to provide for the care of a minor child or a special needs family member. When managing trust funds, trustees must meet the fiduciary duties provided by the Texas Trust Code.
What Is a Fiduciary?
A fiduciary is someone who has a legal duty to care for someone else’s interests. A trustee’s fiduciary duties include properly managing and protecting trust property. The law broadly authorizes trustees to invest the trust’s funds to create interest and grow the principal. However, the types of actions a trustee can take to manage the trust are limited by their fiduciary duties. In Texas, trustees have the duty of:
- Care—the trustee must invest and manage trust property with the care and skill of a reasonably prudent investor;
- Loyalty—the trustee must manage trust assets for the sole benefit of the beneficiaries and avoid receiving a personal benefit, self-dealing, and conflicting interests;
- Good faith—the trustee must administer the trust according to its terms and in the best interests of the beneficiaries;
- Prudence—the trustee must verify facts and evaluate investment and management decisions in the context of the trust portfolio and as part of an overall investment strategy; and
- Disclosure—the trustee must provide the beneficiaries with an honest accounting of trust transactions.
As a whole, the trustee’s fiduciary duties require them to act in the best interests of the beneficiaries when buying, selling, and investing trust assets. When a trustee violates their duties and harms the trust, it is a “breach of fiduciary duty” or a “breach of trust.”
Examples of a Breach of Trust
A trustee may commit a breach of trust by engaging in the following behaviors:
- Using trust assets for their own benefit,
- Commingling personal funds with trust funds,
- Investing without care or skill,
- Purposefully selling property below market value,
- Failing to discharge debts, or
- Failing to account for profits.
The trustee’s fiduciary duties ensure that trusts remain a safe and effective wealth management and estate planning tool. If the trustee acts outside the terms of the trust or the Texas Trust Code, a lawsuit can help you recover what you have lost.
What Remedies Are Available After a Breach of Trust?
When trustees fail to comply with their fiduciary duties, they are legally responsible to the beneficiaries for the loss. A court can provide the trust beneficiaries with monetary damages and equitable relief, including:
- Compelling the trustee to repay a loss in value or profit,
- Compelling the trustee to perform their duties,
- Preventing the trustee from committing a breach of trust,
- Ordering a trustee to present a financial accounting,
- Appointing a receiver to take on the trustee’s role,
- Suspending or removing the trustee,
- Voiding a trustee’s action, and
- Tracing trust property that the trustee wrongfully disposed of.
To receive relief, a beneficiary must file a lawsuit against the trustee. If the trust is testamentary, meaning the trust was created by a person’s will, the lawsuit will be heard in probate court. Regardless of which court hears the suit, the beneficiary must provide evidence of the trustee’s actions that caused the breach of trust. An attorney can help you secure the evidence you need to prove your claim.
The Law Offices of Kyle Robbins, PLLC: Protecting Your Family’s Trust Assets
Trusts are an essential component in an effective estate plan. However, a trust can only benefit your family if the trustee faithfully manages it. When the trustee fails to meet their fiduciary duties, you and your beneficiaries have rights under the law. Let our attorneys examine your case and help you answer, Can you sue a trustee for breach of fiduciary duty in Texas?Our attorneys use a collaborative approach and work with you to identify a remedy that meets your needs. Our lawyers are dedicated to helping you provide financial security for your loved ones. If you’re a trust beneficiary and suspect a breach of trust has occurred, we can help you investigate the matter, gather evidence, and file a lawsuit for breach of fiduciary duty. Contact us by phone or online to schedule a consultation.