Trustees play a fundamental role in the administration of trusts. It is their job to ensure that the trust serves the purpose for which it was created, that trust documents and records are properly maintained, and that the assets of the trust are financially well-managed. While most trustees take these duties seriously and serve to the best of their ability, others are less scrupulous. Thankfully, when a trustee is not performing as he or she should, there are avenues for removing them from the role, including filing a suit for breach of fiduciary duty.
Understanding the Fiduciary Duties That Trustees Owe
Trustees have three primary fiduciary duties that they owe to a trust and its beneficiaries:
- Duty of Care: Trustees have a duty to carefully manage the finances and assets of a trust. This includes acting as a reasonably prudent investor would in maintaining trust assets.
- Duty of Impartiality: Trustees of trusts with multiple beneficiaries must administer the trust in a way that does not preference one beneficiary over another.
- Duty of Loyalty: Trustees have a duty to act in the best interest of the trust at all times, rather than in their own self-interest or the interest of others.
When Breach Occurs
Trustees can violate these three duties in many different ways, resulting in a potential legal claim for breach of a fiduciary duty. Potential breaches include:
- Allowing trust assets to go to waste or consistently take losses by failing to properly manage them.
- Intermingling the trustee’s funds with the funds of the trust, so that it is unclear whether the trustee is being loyal to his financial interests or the interests of the trust.
- Failing to provide proper documentation or accounting for trust assets.
- Allowing co-trustees or beneficiaries to act in a way that is inconsistent with the purposes of the trust.
- Creating a conflict of interest between the interests of the trustee and what is best for the beneficiaries, such as borrowing from a trust or benefiting from a trust.
Filing a Breach of Fiduciary Duty Claim
To bring a claim against a trustee for a breach of fiduciary duty in Texas, a claimant must show several things, including: (1) that there was a fiduciary relationship between the trustee and the claimant; (2) that the trustee breached his or her duty to the claimant; and (3) that the claimant experienced an injury because of that breach. Importantly, individuals wishing to file suit for breach of fiduciary duty must do so within four years of the trustee’s breach.
Consult With The Experienced Litigators at Romano & Sumner, PLLC
If you believe that the trustee of your trust is not managing the trust in the best way possible, or not acting in your best interest, you should talk with an attorney as soon as possible. The estate litigators at Romano & Sumner, LLP can help you evaluate your situation and determine whether you may have a claim under Texas law for breach of fiduciary duty. For assistance with your claim, contact us online or at 281-242-0995.