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Trustees play a vital role in estate planning, managing assets, and ensuring beneficiaries receive what they are entitled to. When a trustee acts improperly—whether through negligence, mismanagement, or intentional wrongdoing—it can cause financial harm and legal disputes.
Whether you’re dealing with a trust dispute in El Paso or questioning a trustee’s actions in Dallas-Fort Worth, having an experienced estate litigation attorney is essential to to protecting your interests. Here’s what you need to know about trustee misconduct under Texas law.
What Is Trustee Misconduct?
A trustee is legally required to act in the best interests of the beneficiaries and manage the trust with care, honesty, and loyalty. Failure to uphold these responsibilities may be considered misconduct, which can lead to legal liability.
Misconduct can be intentional—such as stealing from the trust—or unintentional, like failing to manage investments properly. Either way, when a trustee breaches their duties, beneficiaries have the right to take legal action.
Common Examples of Trustee Misconduct
Mismanaging Trust Assets
One of the trustee’s primary responsibilities is to manage the trust’s assets wisely. A trustee failing to act prudently can lead to financial losses. Examples of mismanagement include:
- Making risky or speculative investments that reduce the value of the trust.
- Failing to maintain real estate or other assets properly.
- Allowing trust funds to sit idle instead of ensuring they generate income.
If a trustee neglects the trust’s financial health, beneficiaries may have grounds to seek their removal or hold them financially accountable.
Self-Dealing and Conflicts of Interest
Trustees must act in the best interest of the beneficiaries, not themselves. When a trustee profits from the trust or engages in transactions that benefit them personally, it’s known as self-dealing. Examples include:
- Using trust funds to invest in their own business.
- Selling trust property to themselves or a close family member at a below-market price.
- Taking excessive fees or compensation beyond what is reasonable.
Self-dealing is a serious violation of trust law and can result in legal action, including removing the trustee.
Failing to Distribute Trust Assets
Trusts are meant to benefit the beneficiaries, but sometimes, a trustee withholds distributions unfairly or delays payments without justification. This could happen when:
- A trustee refuses to follow the terms of the trust agreement.
- They make arbitrary decisions about who receives money and when.
- They claim the trust lacks enough assets but refuse to provide financial records.
If a trustee improperly withholds funds, beneficiaries can petition the court to force distributions or remove the trustee.
Lack of Communication or Transparency
Trustees are required to keep beneficiaries informed about trust matters. Some trustees fail to provide updates, leading to suspicion and conflict. Warning signs include:
- Refusing to provide accounting records or financial statements.
- Ignoring beneficiary questions or concerns.
- Hiding information about how assets are being managed.
A trustee who refuses to communicate openly may be attempting to hide misconduct, and beneficiaries have the right to demand transparency.
Using Trust Funds for Personal Expenses
One of the most blatant forms of trustee misconduct is using trust assets for personal gain. This can include:
- Using trust funds to pay for vacations, cars, or personal expenses.
- Taking unauthorized loans from the trust.
- Commingling trust assets with personal accounts, making it difficult to track how funds are being used.
If a trustee uses the trust as their personal bank account, legal action can be taken to recover misused funds.
What Can Beneficiaries Do About Trustee Misconduct?
If you suspect trustee misconduct, acting quickly is essential. Here are the steps beneficiaries can take:
- Request an accounting – Trustees must provide financial records when asked.
- Gather evidence – Keep records of missed payments, questionable transactions, or lack of communication.
- Consult an attorney – Legal guidance can help determine whether misconduct is occurring and what steps to take.
- File a legal claim if necessary – Courts can remove a trustee, order repayment of misused funds, or force distributions.
If you are in El Paso and believe a trustee is mismanaging a trust, seeking legal help early can prevent further financial loss.
Resolving Trustee Misconduct Dispuyes in El Paso
Whether you’re a beneficiary facing trustee misconduct or a trustee needing legal guidance, having an experienced estate litigation attorney on your side is essential. At the Law Office of Carey Thompson, we help clients in Dallas-Fort Worth and throughout Texas resolve trust disputes and protect their rights. If you need assistance with a trustee dispute, call today to schedule a consultation.