What can be done if a trustee uses Trust money to their own benefit?

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What can be done if a trustee uses Trust money to their own benefit?

My sister and I are co-trustees of our father’s trust. He left a house which my sister purchased after his death. The property was sold “as is”. She used money from the Trust to upgrade the house (i.e. pool repairs, security system, paint, plumbing supplies, etc.). These improvements were never authorized or discussed by me as co-trustee. We are in dispute as to whether this was legal.

Asked on January 28, 2016 under Estate Planning, Virginia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

It depens on the purposes of the trust. If one purpose was to benefit, provide money to, take care of, etc. you and your sister, then this may well have been legal: she'd be doing one of the things the trust was for.
If the trust is for other purposes (e.g. family members other than you and your sister are beneficiaries; or it's a charitable trust), then this would be improper, and if a co-trustee (you) or a beneficiary brought a legal action (lawsuit) seeking an "acounting" of the trust and your sister's actions as trustee (this suit would be brought in chancery court), your sister could be compelled to repay all sums she took out to benefit herself.


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