Failing to fulfill these duties or engaging in activities that endanger the trust may be a breach of fiduciary duties in the state of California, opening the door for legal action against the trustee.
Fiduciary duty starts the moment someone agrees to be a trustee. Once they agree to take on fiduciary responsibility, the law forbids them from acting in any way that could be detrimental to the beneficiaries’ best interest. Trustees must exercise honesty and integrity in every situation involving the trust, and their actions must be free of conflicts of interest.
A breach of fiduciary duty happens when the trustee acts in his or her own interest rather than in the best interest of the trust beneficiaries. A fiduciary cannot use the principal for personal advantage, for example, or use the trust’s assets or property for personal gain.
Penalties for breach of fiduciary duties may include compensatory and punitive damages, which means the fiduciary would have to pay back lost money and may have to pay fines. The fiduciary would also have to deal with the consequences of a criminal act, and could potentially face jail time.
Open and honest communication with the beneficiaries and other parties involved in the trust can help fiduciaries avoid breaches – consulting with an experienced estate lawyer can also help. It is often in the best interest of the fiduciary accused of a breach to contact an experienced attorney for help.
For more information about breach of fiduciary duty in California, consult with Charles D. Stark.