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3 ways a trustee could violate their fiduciary duty

A trustee has the responsibility of managing the assets that fund a trust and distributing them to beneficiaries. The person who created the trust assigned them to a position of authority likely because that individual believed the trustee was a responsible, ethical person.

Unfortunately, trustees don’t always live up to the obligations entrusted to them. Some of their failures could constitute a violation of their fiduciary duty and give beneficiaries grounds to remove them. What are some common ways a trustee could violate their fiduciary duty to a trust?

They don’t uphold the terms of the trust

Trust documents often include limitations or restrictions on the use of trust assets. There could also be conditions that beneficiaries have to meet before they have access to trust resources. If the trustee does not uphold those terms and instead distributes assets according to their own wishes, that will likely constitute a violation of their fiduciary duty.

They seek to personally profit off of the trust

The term fiduciary duty means that someone has an obligation to put the best interests of others above their own. A trustee should make decisions that maximize the value of trust assets. If they try to profit off of those assets personally or misappropriate them, that is a clear violation of their duty to the trust. 

They mismanage or undervalue trust assets

Sometimes, trustees can do damage to the value of a trust out of incompetence rather than maliciousness. They could fail to properly invest resources or pay bills, leading to the repossession of assets or the diminishment of their value.

When a trustee makes repeated mistakes or demonstrates an inability to fulfill their responsibilities, that could also begin actionable violation of their duty. Understanding when you might have grounds to initiate trust litigation can help you protect the assets meant to benefit you.

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