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A trustee is appointed by the creator of a trust, or by the courts, to oversee and distribute a trust’s assets after a person dies. But what happens if a trustee steals from a trust? Trustees have a duty of loyalty to the beneficiaries of a trust. But overseeing a significant amount of money and assets can tempt people to take what isn’t theirs.
A trustee who steals from a trust can be charged with breaching fiduciary duty—failing to act faithfully to benefit a person or group—resulting in potential civil and criminal charges. If you suspect a trustee is stealing from a trust, it’s important to gather as much evidence as possible. Contact an Alabama trust attorney as soon as you can, before more damage can be done.
Trustees have access to bank accounts, physical property, and other valuables. Therefore, an unfaithful trustee can steal from a trust. A trustee’s job is to assess the value of possessions, oversee sales, and ensure that proceeds and property go to the right people. In controlling assets of a trust, a trustee has significant responsibility, and, frankly, significant opportunity to steal. Some of the ways in which trustees can steal are:
Knowing what to do if a trustee steals—or if you suspect a trustee is stealing—is key to stopping theft and to restoring a trust’s assets and value.
As soon as you suspect that a trustee has been misappropriating funds or otherwise stealing from a trust, you should contact an Alabama estate and trust attorney. After your suspicion is aroused, begin to document information and evidence with as much detail as possible. An attorney can then help to file court documents needed to hold a trustee accountable. The more quickly you act, the sooner that further damage and theft can be mitigated.
If you suspect that a trustee is stealing, you should demand that the trustee provide a trust accounting, which is a detailed record of a trust’s income and expenses. While investigating an account, transactions or payments that benefited a trustee but did not benefit the trust beneficiaries could indicate a breach of fiduciary duty. Similarly, known assets or sales that don’t appear on the record could be evidence of mismanagement.
A trustee must maintain careful written records of all trust activity, including expenses, sales, income, and distribution of funds. Neglecting this duty could itself be seen as a breach of fiduciary duty.
Trusts are common instruments of estate planning because they allow for a degree of flexibility and change in the estate structure while still carrying out the appropriate distribution of assets. As their name implies, however, the rely on trust, specifically from the trustee who manages a trust’s assets.
The exact duties and expectations of a trustee vary based on state laws and specific circumstances, but the basic duties are universal. So, can a trustee cheat beneficiaries? A look at a trustee’s basic duties reveals openings for doing so.
By stealing from a trust or otherwise breaching fiduciary duty, a trustee keeps beneficiaries from obtaining the assets or funds that they’re entitled to. In such cases, a trustee could face civil and criminal charges.
If a trustee steals from a trust, a family or beneficiary can seek to hold the trustee accountable in both civil and criminal court. A trust litigation attorney can handle the civil case, in which a family seeks to recover the funds stolen from a trust. In many cases, beneficiaries are frustrated and hurt by a trustee’s alleged misappropriation of funds. But some beneficiaries do not wish to see a compromised trustee incarcerated or even prosecuted for breach of trust.
A trustee can be held liable in civil court, but can a trustee be held criminally liable? Yes. A trustee who steals from an estate commits embezzlement, or a criminal misappropriation of funds belonging to a trust. Embezzlement is a serious crime that can result in felony charges.
A trustee who took money or assets from an estate might claim that he was only paying for estate expenses, taking his share of legal fees or compensation, or commingling funds by mistake. However, in a criminal case, it will be up to a court to decide who and what to believe.
While not always the case, an accused trustee who is forthright about her embezzlement may face less severe criminal charges than one who continues to try and hide her actions until an investigation reveals the wrongdoing.
Trustees have a range of duties to carry out that require the utmost responsibility and faith. By understanding what happens if a trustee steals from a trust, you will be ready to act if an unfaithful trustee misappropriates funds.
If you suspect that a trustee has been embezzling funds or breaching fiduciary duties, an estate litigation lawyer can help you take the next steps to prove accusations and to begin recovering assets and funds.
The trust litigation attorneys at Caldwell Wenzel & Asthana are among the most active estate litigation practitioners in Alabama. We are experienced with litigation and trial procedures and also with estate planning, resolutions, and disputes. We know that trust disputes can be difficult matters, and we act with the utmost respect to our clients’ sensitives and situations.
Contact our legal team today at (251) 444-7000 and request a free consultation with our experienced Alabama estate litigation attorneys.