Legal recourse against personal representatives, trustees, and attorneys for breaches of fiduciary duties or financial mismanagement.

When you entrust your assets to a fiduciary, you expect them to manage these resources responsibly. However, situations arise where you might find that the fiduciary is not meeting their obligations.

Mismanagement of funds can lead to significant financial losses and breaches of trust within a corporation or a family. If you suspect mismanagement or self-dealing, you might wonder whether legal action against the fiduciary is a viable option.

Understanding fiduciary’s responsibilities

Fiduciaries must follow the law, invest the trust’s assets wisely, and avoid conflicts of interest. Their actions should always benefit the trust’s beneficiaries. If fiduciary’s use the trust’s assets for their gain or make decisions that harm the trust’s value, this could constitute mismanagement.

Grounds for suing a fiduciary

You may be able to sue a fiduciary if they engage in actions that contradict the trust’s terms or fail to preserve the trust’s assets. 

Common examples of mismanagement include:

• Making poor investment choices that result in a loss of trust assets.
• Benefiting personally from the trust’s assets without consent from the beneficiaries.
• Failing to provide required accounting and information to beneficiaries.

Legal actions you can take

If you believe a fiduciary is mismanaging the trust, your first step should be to request a complete account of all trust transactions. This transparency allows you to assess how the fiduciary is managing the funds. It might be time to take legal action if the fiduciary fails to comply or if the accounts reveal questionable activities.

Beneficiaries can request the court to review the fiduciary’s actions. Several outcomes are possible if the court finds that the fiduciary has violated their fiduciary duties. The court may order the fiduciary to repay losses or, in severe cases, replace the fiduciary altogether.

Mismanagement of trust funds is a serious concern that can impact beneficiaries significantly. If you suspect mismanagement, it’s important to act swiftly to safeguard your interests and the integrity of the trust.