happy family

estate planning document below a calculator and penIn cases where a trustee breaches his or her legal duty, they can be held liable to pay. How much should the trustee be liable to pay? You will be surprised by the answer.

Three Types of Situations Where Damages can be Awarded

Under PROB CA PROBATE § 16440, trustees are chargeable, when he or she commits a breach of the trust, in basically three different types of situations:

  1. Any depreciation or loss of the trust’s value, plus interest;
  2. Any type of profits made by the trustee from the trust, with interest; and
  3. Potential profits that would have been accrued by the trust if the trustee had not breached the trust.

However, in cases where the trustee acted reasonably prudent and in good faith, given the set of circumstances that the trustee believed, the court may determine it would be equitable to excuse the trustee in part or completely from all liability.

Trustees get off Easy

Basically, damage to the trust is the biggest factor. Beneficiaries cannot receive damages in cases where the trustee breaches his or her duty, but no loss is suffered. Breaches without any loss are almost considered like they did not happen as far as the damages that would be owed trustee.

Lawsuits against trustees only result in monetary damages when the victims have proof of an actual loss. There are no separate set of damages against a trustee, such as pain and suffering, etc. Additionally, no system exists for victims to be compensated with punitive damages from a trustee’s for gross negligence or outrageous conduct. Consequently, getting compensation from a trustee comes down to whether or not a loss was incurred by the trust.

When taking into consideration the amount of pain and suffering a beneficiary can go through from an immoral or untrustworthy trustee, it seems unfair that only damages for an actual loss are permitted by the law. The reason behind this is because the law considers the trust money not to be the legal property of the beneficiaries. Beneficiaries are considered the beneficial owners as opposed to the legal owners of the trust.

Let Us Help You Today

Creating a trust and naming a trustworthy and capable trustee is no easy task. Choosing the right trustee is one of the most important decisions you will make in your estate plan. Feldman Law Group is here to help you create a valid trust that enables you to properly manage and distribute your assets. Additionally, we help evaluate your potential trustees and ensure that he or she can properly manage your trust.

In cases where beneficiaries are having problems with the trustee, Walnut Creek estate planning attorney Aaron Feldman may be able to help you remove him or her. Our skilled estate planning attorney will ensure that the trustee is held liable for any and all damages to the trust. Contact us online or call today at (925) 208-4543 to discuss your trust and/or trustee further.