When is a Trustee in Breach of Trust?

If you are the beneficiary of a trust being administered in Los Angeles, Woodland Hills or all other California cities, you may at times feel as though you are at the mercy of the trustee. After all, that person or party has been given authority to oversee the trusts’ assets. However, his or her role should not be mistaken for control over those assets. In fact, the trust instrument typically outlines a specific duty that the trustee owes to you as a beneficiary. A violation of that duty is considered to be a breach of trust, and could be grounds to have the trustee’s powers revoked.

The California Probate code lists the following scenarios as the only circumstances where a trustee would not be liable to you for acts and omissions in violation of his or her duty:

•          The violations were committed by an agent of the trustee.
•          The violations were committed by a co-trustee.
•          The violations were committed by a predecessor trustee.

Yet even in these cases, exceptions exist. For example, if the trustee advises the agent to commit the violation, or delegates authority to perform an act not authorized by the trust instrument, then he or she may be liable. The same is true if he or she conceals the actions of an agent, does not exercise reasonable prudence in retaining the agent or fails to review the agent’s performance. If he or she does not encourage an agent to redress any wrongs committed, then he or she may also be in breach of trust.

The same exceptions apply to co- and successor trustees. A co-trustee may also be liable if he or she assisted in violations committed by his or her counterpart. Liability may also be assigned to a successor trustee who had information regarding the predecessor’s violation, yet failed to act on it.