Your loved one did everything right. They planned for the future. They made arrangements so you didn’t have to. They put a trust in place to ensure a smooth transfer of assets upon their death. But even after all that planning, their trustee just doesn’t seem to be doing things right.
When a trustee distributes money or property to the wrong person or in a way prohibited by the trust, or simply refuses to distribute assets without a valid reason, beneficiaries and heirs may have the right to sue. Claims involving wrongful distribution of trust assets to beneficiaries in California can lead courts to order repayment, remove trustees, require financial disclosures, or grant other remedies.
At Geremia & Cullen, we help California clients navigate complex trust and estate disputes with a practical, compassionate approach. We understand that these disputes often arise during periods of family tension, and we work to explain legal issues clearly, address the emotional aspects of the conflict, and pursue realistic resolutions through negotiation, mediation, or litigation.
How Do Trusts Work in California?
A trust is a legal arrangement where one person, a trustee, manages property owned by the trust to benefit others. The settlor is the person who creates the trust, while beneficiaries receive benefits according to its terms.
Trust Terms
Trusts often contain detailed answers to the following questions:
- Who should receive trust assets?
- When do distributions occur?
- How should the trustee manage property?
- When can the trustee make payments or decide whether to make them?
- What authority does the trustee have over investments and expenses?
Trustees have a legal duty to manage the trust according to its terms.
Trustee Duties
Trustees have a fiduciary duty to the trust and its beneficiaries. Their responsibilities commonly include:
- Protecting trust assets from loss or misuse,
- Keeping accurate financial records,
- Providing beneficiaries with reports showing how the trustee handles trust property (accountings),
- Following the trust’s distribution instructions,
- Treating beneficiaries fairly and impartially, and
- Avoiding conflicts of interest.
California law also requires trustees to act prudently and manage trust property responsibly. When trustees fail to meet these obligations, they may breach their fiduciary duties, leading to potential trust disputes.
When Do Trust Distribution Disputes Arise?
Trust disputes often begin when beneficiaries suspect problems with trust management. Several issues with how the trustee manages the trust can lead to litigation in California.
Trustee Not Distributing Assets
A trustee may delay distributions for legitimate administrative reasons, such as paying taxes, valuing property, resolving debts, or preparing required paperwork. However, if a trustee fails to make any distributions, they may violate their fiduciary duties. A trustee not distributing assets may be liable if the trust terms require distributions or if a distribution is in the beneficiaries’ best interests.
Misappropriation of Trust Funds by Trustee
Trustees cannot use trust funds for any purpose other than those authorized by the trust’s terms. Using funds for unapproved purposes represents misappropriation of trust funds by a trustee.
In some situations, trustees intentionally steal or misuse trust assets. In others, trustees transfer trust property for personal benefit in ways the trust does not allow. Both represent misappropriation.
Misuse of Trust Funds by Trustee
Not every misuse of trust funds by a trustee involves intentional wrongdoing. Trustees must not handle trust assets carelessly, exceed their authority, or make decisions that violate the trust terms.
Potential examples include:
- Making gifts from the trust without authorization,
- Investing trust assets recklessly,
- Distributing property to the wrong beneficiaries, or
- Failing to preserve trust assets properly.
Even when trustees believe they are acting reasonably, violations of fiduciary duties can still create liability if their decisions are not objectively reasonable.
When Can Someone Sue for Wrongful Distribution of Trust Assets?
California law allows beneficiaries and certain other persons with a legal interest in a trust to file lawsuits for wrongful distribution of trust assets to beneficiaries in California. Beneficiaries may sue when a trustee:
- Distributes assets in a way that violates the trust terms,
- Distributes assets to a beneficiary without a legal right to receive that property,
- Favors one beneficiary in a way that violates fiduciary duties,
- Distributes assets before resolving debts or obligations properly, or
- Loses, transfers, or mismanages trust assets through misconduct or negligent management
In many cases, beneficiaries sue based on a breach of fiduciary duty claim.
Concerned about a wrongful trust distribution?
If trust assets were distributed improperly, you may have legal remedies. Our attorneys can evaluate your case and help protect your beneficiary rights.
How Do You Sue Over Wrongful Trust Distributions?
If you need to take legal action over wrongful trust distributions, you file legal paperwork with the California courts. You may ask the court to:
- Order distributions,
- Require a formal accounting,
- Temporarily freeze trust assets while the case remains pending,
- Remove the trustee,
- Hold the trustee financially responsible for losses, and
- Recover improperly distributed property.
California courts have broad authority to supervise trusts and tailor solutions to address specific trustee misconduct. However, you may settle the dispute before trial. Regardless, once you file legal paperwork, you begin the lawsuit.
Discovery and Investigation
During litigation, the parties may exchange documents, answer written questions, and participate in depositions, where lawyers conduct out-of-court interviews. We call this stage of the case discovery. It allows the parties to gather evidence and investigate financial transactions more thoroughly.
Consider Mediation or Settlement
Many California trust disputes resolve through settlement or mediation rather than trial. Your lawyer guides you through either process and represents you throughout.
During mediation, a neutral third party helps you discuss possible solutions and negotiate a settlement. Settlement may help preserve relationships, reduce legal expenses, and resolve disputes more efficiently. Depending on the circumstances, a resolution may involve:
- Repayment of funds,
- Replacement of the trustee,
- Revised distribution schedules, or
- Agreements about future trust management.
When parties cannot reach a settlement, the court resolves the dispute through a trial.
Speak with Geremia & Cullen About Your California Trust Dispute
Trust disputes can leave beneficiaries feeling frustrated, betrayed, and uncertain about next steps.
At Geremia & Cullen, we help clients throughout California understand their rights in cases involving trustee misconduct, delayed distributions, and improper handling of trust assets. We focus on the legal issues while also recognizing the emotional strain that often accompanies conflicts involving loved ones and inheritances. Our firm handles many trust litigation matters on a contingency basis, which means clients may not pay attorney fees unless the case results in a recovery.
We combine attentive communication with practical strategies designed for each client’s situation. Contact us today to discuss your concerns.
Legal References Used to Inform This Page
To ensure the accuracy and clarity of this page, we referenced official legal and other resources during the content development process:
- Trustee’s Duties in General, Cal. Prob. Code § 16000 (1990).
- Trustee’s Standard of Care, Cal. Prob. Code § 16040 (1996).
