What to do if a trustee is using Trust funds for their own benefit?

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What to do if a trustee is using Trust funds for their own benefit?

My grandfather left my mother a Trust when he died. My brother and aunt are in control of it. My aunt has not been involved; only my brother has paid some bills or given my mother money from the Trust. We have reason to believe that my brother has been using money from the Trust for his own use.

Asked on February 10, 2014 under Estate Planning, Ohio

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation's board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust's beneficiaries, and an attorney has a fiduciary duty to a client.

A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client's behalf.

When one person does agree to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter. The client is entitled to the best efforts of the fiduciary on his behalf and the fiduciary must exercise all of the skill, care and diligence at his disposal when acting on behalf of the client. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client.

 

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

If a trustee is doing that, then except to the degree that the instrument or document creating the trust authorizes the trustee to pay some of his/her bills or take some compensation, he or she is violating his or her fiduciary duty, the terms of the trust, and the law. If you think this is happening, your mother, as the beneficiary, should speak with an attorney about possibly brining a lawsuit or taking other action against your brother.


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