Misappropriation of funds in custodial account
Question Details:
My dad's parents set up a stock account for me as a child, and my dad was custodian. In 2007 he sold the stock without telling me and took all of the money ($25,000). I didn't know he took this money from me until the IRS contacted me recently telling me I owe taxes on this stock I sold, even though I have never seen any of the money from the stock. I was wondering if I should sue my dad for the money that he took from me and never gave me. I could have signed for the money at 21, which will be in June, but since it is all gone, there is nothing I can take from the account.
Wills, Trusts, Probate Law Answers
It looks like you probably can sue your father for this. If it was put into a custodial account, and wasn't used for your benefit, there's a good chance that the court will see this as a breach of fiduciary duty, since the custodian of an account of that sort is a trustee.
Your father was able to get a tax break by making that stock "your" money, and, obviously, he didn't pay any taxes at all on the sale proceeds.
It's hard, having to take a parent to court, but it's also hard when a parent gives you this good a reason to have to do it.
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