What can be done by a Trustee’s malfeasance?

I was coerced into co-signing a loan by the executor of my husband’s Trust. He informed me in writing, if I would sign the 80K loan/personal guarantee for my husband and the Trust that he not make any disbursements until a real estate asset owned by my husband’s Trust was sold. The loan was just a

Asked on June 18, 2016 under Estate Planning, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Yes, you can sue the trustee. It may be a form of theft, such as theft by deception or conversion (which is taken for yourself or your associates propert entrusted to your control but which belongs to another). In addition, it is almost certainly breach of fiduciary duty. "Fiduciary duty" is the duty imposed by law on all trustees (and certain other similar types, like executors, people exercising power under  POA, legal guardians, etc.) to act with loyalty to and in the best interests of their principals--the beneficiaries of the trust, will, POA, etc.  In carrying out their fiduciary duty, a fiduciary (like a trustee) must not only show loyalty but also must demonstrate the care that the average reasonable person would take to protect his/her own money and assets. Based on what you write, the trustee violated the fiduciary duty; when a trustee violates his/her fiduciary duty, he/she can be held liable for the breach. A court action can be filed to force the trustee to "account" for his/her actions and, if he/she did violate his/her duty, repay out of his/her own pocket the amount(s) taken.
If the builder has taken the money and disappeared without doing anything, the builder may have variously committed theft by deception or conversion, fraud, and/or breach of contract, and you may be able to sue the builder, too.
With $56k or so at stake, you and your husband should consult in person with an attorney immediately, about suing the builder and/or the trustee to recover the money; the attorney can also advise whether you should press charges against one or both.


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