What Are the Damages for a Trustee’s Breach of Fiduciary Duty in California?
TRUSTEES HAVE FIDUCIARY DUTIES TO THE BENEFICIARIES OF A TRUST
Trustees are agents who hold and manage manage the assets of a trust (the trust estate) on behalf of the beneficiaries.
The trustee owes fiduciary duties to both the current beneficiaries (those with current interests in the trust estate) and remainder beneficiaries (those whose interest in the trust does not become possessory until after the occurrence of events described in the trust agreement – usually the death of a settlor or other beneficiaries, or the beneficiary reaching a certain age).
Generally speaking, trustees have the following fiduciary duties:
- to use reasonable skill and diligence when managing the trust, and to pay proper attention to those duties
- to maintain and deliver proper accountings of trust assets
- to act in good faith, and with appropriate loyalty
As with all agents, a trustee is required to place the beneficiaries’ interests (in the context of the trust) above the trustee’s own, when dealing with the trust and the trust estate.
WHEN HAS A TRUSTEE BREACHED THIS DUTY?
Some breaches of fiduciary duty are easy to spot. For example, a trustee stealing from the trust or refusing to distribute trust property to the beneficiaries in accordance with the trust terms.
Some breaches are more difficult to identify. For example, where the trust allows the trustee discretion, there may be borderline cases where it is difficult to determine whether a trustee acted in good faith.
(As always, if you think the trustee of a trust in which you have an interest has acted improperly, consult a lawyer immediately for an individual evaluation of your legal rights and potential claims.)
Ultimately, whether or not a trustee has breached his or her fiduciary duty is a question of fact, which must be determined on an individual, case-by-case basis. Each set of facts is unique, and must be evaluated independently, using the law and precedents (prior cases) as a guide.
WHAT CAN A BENEFICIARY RECOVER IF THE TRUSTEE BREACHES A FIDUCIARY DUTY?
Trust beneficiaries can recover monetary damages (and sometimes, obtain specific performance, which means a court order requiring the trustee to act in a certain way or perform certain acts) for all of the harm the beneficiary suffered as a result of the trustee’s breach of a fiduciary duty owed to the claimant beneficiary.
However, in order to recover, the claimant beneficiary must prove:
- That (s)he is a beneficiary of the trust
- That the trustee owed the claimant a fiduciary duty
- That the trustee breached the fiduciary duty
- That the beneficiary suffered measurable harm; and
- That the trustee’s breach was the cause of the beneficiary’s damages.
If any of these elements cannot be proven, the trustee is not liable for damages. In many cases, the most difficult elements to prove are causation and actual damages. This is because not every injury is caused by a wrongful act, and because not every wrongful act results in measurable harm or damages.
However, where a trustee’s wrongful acts do cause damage to the beneficiaries of a trust, the trustee can be held liable, and required to compensate the beneficiaries for the resulting damages.
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Disclaimer: THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY, AND DOES NOT CONSTITUTE LEGAL ADVICE OR CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN THE AUTHOR OR ROSS LAW AND ANY PERSON. Your legal rights and experiences may vary. Never use an online article (including this one) to evaluate your legal rights or claims. Consult an experienced attorney promptly to obtain a personalized evaluation of your claims, potential damages, and the various legal rights and options available to you.
You may lose or compromise your rights if you delay in consulting legal counsel. Most legal claims (and defenses), as well as legal and court procedures, are complicated and fact-dependent. If you believe you have a claim against someone who injured you, a lawyer who represented you in a previous lawsuit, or any other legal claim, consult an experienced lawyer immediately for an evaluation of your individual rights and claims.
