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When a trustee breaches the fiduciary duty to a beneficiary

On Behalf of | Mar 25, 2021 | Estate planning |

Your financial well-being as the beneficiary of a trust relies on the ethical management of the investments and other assets in the trust. Your trustee has a fiduciary relationship with you, meaning that you put confidence in him or her to act in your best interests as the manager of the trust.

This relationship is legal as well as financial. If your trustee fails to perform trustee duties ethically and in your best interest, you may be able to hold him or her liable for the losses you suffer.

Trustee liability

Texas statutes explain that if the trustee makes investments that appeared to be sound, but then they lose money, it is not a breach of duty as long as the trustee was acting in good faith. Likewise, your trustee is not liable for assets that depreciate.

A trustee is liable for a breach of trust. This may involve intentionally acting in bad faith, acting with reckless disregard of the consequences you will suffer or acting to gain personal profit from the trust.

Damages from a breach of trust

Breaching the fiduciary duty is illegal as well as unethical, and you have the right to sue a trustee who has essentially stolen your money. If you win in court, you may be able to recover any money the trustee made through the illegal actions or the money that the trust would have accumulated if the breach had not happened. If the trust estate depreciated in value because of the breach, the trustee would be liable for that, as well.

Many trust documents include safeguards such as requiring trustees to seek professional advice before making major financial decisions.