Newport Beach Breach of Trust Lawyer

In California, a breach of trust, or a breach of fiduciary duty, is a serious matter. If you find yourself a beneficiary of a trust and suspect a trustee of being guilty of some kind of wrongdoing, negligence, or misconduct, you may be wondering what kind of action you can take. After the loss of a loved one, the last thing you want to worry about is the behavior of the very person meant to help you. That’s where a Newport Beach breach of trust lawyer comes in.

Ultimately, a trustee is legally responsible for acting in the interest of the trust’s beneficiaries. Their job is to handle all the trust’s property and keep accurate recordings of everything belonging to the trust. Unfortunately, there may come a time when the trustee fails, either by purposeful intent or not, in their duties and commits a “breach of trust.” It is vital, then, for the safety of the trust, to talk to a Newport Beach breach of trust lawyer who can offer you the correct legal advice on what steps to take if you are facing this situation.

What Is a Trust?

In simplest terms, a trust is a legal entity created by the grantor or the trustor. This person transfers assets and/or property into the trust and elects certain people, the trustees, to manage the trust in the interest of the trust’s beneficiaries. There are many different kinds of trusts in the state of California, and each serves its own unique purposes.

• Living Trust: Created while the trustor is still alive, a living trust allows the trustor to continue using their assets during the course of their lifetime. Once the trustor passes, all assets transfer to the named beneficiaries.
• Testamentary Trust: Often referred to as a “will trust,” testamentary trusts do not go into effect until after the trustor has passed away. A testamentary trust will be created through an estate’s last will and testament. These trusts cannot be changed or altered under any circumstances.
• Charitable Trust: Created for the benefit of a charity or non-profit organization, a charitable trust is often established while the trustor is still alive. Upon their passing, the assets will be given to the non-profit or charity of their choosing. Charitable trusts can oftentimes be used to reduce estate taxes or gift taxes owed by the estate. Occasionally, a portion of a charitable trust can still be passed to individual inheritors and the rest to charity.
• Irrevocable Trust: When an irrevocable trust is made, the trustor is not allowed to alter or change any aspects of the trust during the course of their lifetime. It also means that the trustor cannot revoke or take back any assets once they have been put into the trust. Often, these kinds of trusts are more tax efficient if a bit inflexible. They are also a great choice when planning for long-term care or retirement.
• Special Needs Trust: If a grantor wants to ensure that a beneficiary with special needs can be taken care of after their passing, they can set up a special needs trust. A key advantage of this type of trust is that it allows the beneficiary to receive its contents without disqualifying them from governmental assistance programs like SSI.
• Pet Trust: If a grantor has a pet, this kind of trust can ensure that they are taken care of after they can no longer do so. In addition to providing funds for the care of their pet, a pet trust can also outline directions for how that pet is cared for. If the trust takes effect while the grantor is still living, it can provide for the pet’s care if the grantor becomes incapacitated.
• Blind Trust: Created by the trustor, with trustees appointed to manage them, blind trusts are created without the knowledge of the beneficiaries. These are seen as beneficial to the trustor when they suspect that disputes might arise and don’t want the trustees or beneficiaries to know. A common concern is that the involved beneficiaries may engage in conflict over the terms of said trust.
• Life Insurance Trust: Created to allow the trustor to transfer their life insurance account into the trust, these carry the benefit of keeping the life insurance proceeds free from any form of taxation, allowing the beneficiary to access said proceeds immediately following the trustor’s passing. These trusts are a form of irrevocable trust and do not allow the trustor to make any alterations to the trust or borrow against the life insurance policy.
• Credit Shelter Trust: Also known as a bypass trust, a credit shelter trust allows the trustor to grant beneficiaries an established amount of assets that equals the estate tax exemption amount. A family member or spouse can then receive the remainder of the funds tax-free. Furthermore, these kinds of trusts will remain tax-free, even when they begin to grow from investments, hence their popularity amongst trustors.

What Is the Purpose of Trustees?

When a trustee is appointed, they take over all legal ownership of assets being held by a trust. They also take on all fiduciary duties in managing the trust and carrying out all legalities of the trust. They have the duty to act in the interest of any beneficiaries of the trust, whether current or future, and can be held responsible if this duty is ever found to be breached. Their ultimate goal is to protect the legacy of an estate and all those who belong to it.

The duties and responsibilities of a trustee are often unique to the specific trust they have been placed in charge of. However, most trustees can be expected to observe the following:

• Understand the set intentions of the trustor.
• Create and maintain proper records, documentation, and procedures for managing the trust.
• Make distribution of assets or monetary payments to beneficiaries with discretion.
• If other trustees are involved, hold and attend periodic meetings.
• When the trust terminates, distribute all assets to beneficiaries.
• Have a firm understanding of the terms of the trust document and the wishes of the trustor.

What Makes a Dependable Trustee?

When choosing the people to manage your trust, there are several characteristics to look for. After all, avoiding any conflict is always better than having to sit through lengthy legal matters and court proceedings. The following is a list of guiding principles and characteristics to look for when deciding on who to name as trustee of your estate:

• A passion for honesty and a history of trustworthiness
• A wide knowledge of estate planning, including an understanding of concepts and guidelines like the inner workings of insurance, tax, and trust law as well as real estate
• Skilled in organization, management, and problem-solving
• Longevity, i.e., they do not have any physical or mental ailments that might prohibit them from carrying out their fiduciary duties
• Skilled in communication and human relation
• Ability to remain loyal to your legacy but impartial to beneficiaries
• Good at avoiding conflicts of interest or actions of self-dealing
• Act sensibly while fulfilling all duties of the trust

What Is a Breach of Trust?

Whether through negligence or purposeful intent, cases arise where trustees engage in behavior that is harmful to the trust, assets, or beneficiaries. With their broad range of responsibilities, there is always a chance for failure on the trustee’s part. Examples of breach of fiduciary duties may include:

• Placing their own gains and interests above those of the beneficiaries by “self-dealing”
• Combining their own personal funds with funds from the trust
• Accepting bribes in relation to trust assets
• Playing favorites with certain beneficiaries and treating others with prejudice
• Managing assets in bad faith, with the intent to lie to and keep beneficiaries uninformed

Statute of Limitations on Trust Breaches

If you suspect a trustee of acting in any such harmful behavior, there is a certain amount of time you have to address the situation and take the trustee to court. In the state of California, under the California Probate Code, only three years are allowed from the date when the beneficiary discovered the breach of trust to when that beneficiary can bring the situation to court.

If you suspect a trustee of wrongdoing, it is crucial that you contact an experienced and skilled breach of trust lawyer who can help you navigate these often complex cases.

Courses of Action to Take

Perhaps you have evidence or suspicion that a breach of trust has occurred. The trustee may have even threatened that they may engage in an act of intentional misconduct. In either of these situations, there are several courses of action that beneficiaries can ask the court to take that can help repair the harm done.

• Money Judgment: You may find that there is no clear way to recover funds or identifiable assets from the trust that the trustee mishandled. In these cases, the court may order a judgment against the trustee, wherein the trustee must compensate the trust out of their own personal funds or assets.
• Surcharge: If the trustee is also a beneficiary of the trust, the court may order a reduction of their inheritance of the trust’s funds or assets. If the trustee is an outside party, meaning that they are not a beneficiary of the trust, the court may order them to reduce their fees. This amount, or surcharge, should accurately reflect the amount determined by the court that the trustee lost or mishandled.
• Other Possible Actions: These include reducing the trustee’s power over the trust, appointing a temporary trustee to oversee the current trustee’s actions and behaviors, and requesting the court to compel the trustee to hold up their end of the fiduciary duty. The court may also request that a trace be done to recover any physical assets, but this is oftentimes difficult.

Replacement or Removal of a Trustee in Newport Beach

The success of your trust ultimately rests in the ability of your trustee to manage all funds and assets with care and diligence. Unfortunately, some cases arise when removing a trustee is the only option.

Each case in Newport Beach is unique, and how one goes about removing a trustee differs when dealing with a revocable trust versus an irrevocable trust, as the grantor, or trustor, cannot typically remove a trustee without the permission of all parties involved. A request must then be filed with the probate court, either by a co-trustee, a beneficiary, or the probate court itself. The judge will then remove the offending trustee and replace them with a new person in that position.

What Are the Sentences for a Breach of Trust?

If you can prove that the trustee embezzled a certain amount of funds, the trustee can face a misdemeanor charge and carry out a county jail sentence. However, in some cases, when the dollar amount is significantly high, you can pursue a felony conviction, which may leave the trustee facing lengthy jail time or even federal criminal charges.

However, the most common penalties in breach of trust cases are the removal of the trustee and a court order for them to reimburse the trust for any damages they committed, along with all the costs and fees they’ve charged.

Why Hiring a Breach of Trust Lawyer Is Advisable

When considering any of the above courses of action, it is vital to consult with a knowledgeable and trusted attorney who can guide you through the steps of this process. They can help you review all the documentation or records that were made and maintained by the trustee. They can also help discern whether there truly has been a breach of trust committed. If the case needs to be brought to court, a breach of trust lawyer can represent you and your interests there, advocating and fighting for your rights.

Contact a Breach of Trust Lawyer in Newport Beach Today

If you find yourself needing to resolve a breach of trust, it is vital to your success and that of the trust to seek legal counsel right away. To protect your inheritance and legacy for your loved ones, time is of the utmost importance. Our experienced breach of trust legal team is here to assist you and go over all the facts and circumstances of your individual case.

Contact our offices today, and let the team at Ross Law Group, APC, offer solid legal advice and help you navigate these complex circumstances.