Trusts are essential financial instruments that individuals utilize to safeguard and manage their assets. If you’re a beneficiary of a trust, you should expect your trustee to be loyal to you. But what happens if they violate this fiduciary duty and embezzle funds from your trust?
When a trustee is fraudulent, they endanger your assets and should be removed as they may violate a beneficiary’s rights again. If you are a beneficiary, you should petition for trust accounting to discover how much they’ve embezzled and how long they’ve been doing it. This information can inform what crime the fraudulent trustee should be charged with.
Identifying the breach
Understanding whether a trustee is stealing from your trust requires a keen eye for irregularities in financial records and transactions. Look for:
- Unauthorized withdrawals
- Discrepancies in accounting
- Unexplained financial losses
If something seems amiss, it’s crucial to investigate promptly. The first step is meticulous documentation. Gather all relevant trust documents, financial statements and communication records with the trustee. Create a comprehensive timeline of events, including any suspicious transactions or behaviors.
Immediate steps to take
Upon suspicion or confirmation of theft, take swift action to freeze the trust’s assets. This helps prevent further unauthorized transactions and can ensure the preservation of remaining funds. If the trustee’s actions constitute criminal behavior, report the theft to appropriate law enforcement agencies. It is generally a good idea to provide them with documented evidence to facilitate a thorough investigation.
Legal recourse
Filing a civil lawsuit against the trustee is a common course of action. This legal process aims to recover the stolen assets and, in some cases, seek damages for the breach of trust. The court has the authority to remove a trustee who has breached their fiduciary duties. This decision is contingent on the severity of the theft and the trustee’s overall conduct.
Dealing with a trustee’s theft from your trust is undoubtedly challenging. However, by taking immediate and decisive action, you can potentially protect your assets, hold the wrongdoer accountable and implement preventive measures for the future.