Are You a Beneficiary of a Trust That Has Been Mismanaged So As To Suffer Huge Losses?
Trustees charged with management of trust assets are required by law to follow Prudent Investor Rules set forth in Probate Code §§16002(a), 16003, and 16045-16054. A Trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the Trustee shall exercise reasonable care, skill, and caution. Probate Code §16047(a). These rules require Trustees to diversify, avoid speculative risks, and monitor market conditions and react accordingly.
Unfortunately, there is really no government agency that is charged with making sure this rule is followed. Enforcement of the Prudent Investor Rule is not a priority of the SEC, FINRA, the FBI, or for that matter, any state or federal law enforcement agency. In other words, from a practical standpoint, a Trustee can do whatever the Trustee wishes with Trust assets, even engage in improper transactions that result in large losses, unless and until someone objects or seeks legal redress for a violation of the Prudent Investor Rules. Sadly, too many times, Trustee misconduct never comes to light, or is swept under the rug, leaving the injured Beneficiary to wonder at the reasons why Trust assets have disappeared.
However, a Trustee that has violated the law can be held personally liable, such that an injured Beneficiary can recover losses caused by Trustee misconduct through legal proceedings designed to remove the Trustee and assess damages against the Trustee personally. Of course, for this to happen, timely legal proceedings must be initiated by a Beneficiary.
If you have questions about Trustee misconduct or Trust losses, please feel free to give us a call at 1-800-306-6010 or contact us online.
Unfortunately, there is really no government agency that is charged with making sure this rule is followed. Enforcement of the Prudent Investor Rule is not a priority of the SEC, FINRA, the FBI, or for that matter, any state or federal law enforcement agency. In other words, from a practical standpoint, a Trustee can do whatever the Trustee wishes with Trust assets, even engage in improper transactions that result in large losses, unless and until someone objects or seeks legal redress for a violation of the Prudent Investor Rules. Sadly, too many times, Trustee misconduct never comes to light, or is swept under the rug, leaving the injured Beneficiary to wonder at the reasons why Trust assets have disappeared.
However, a Trustee that has violated the law can be held personally liable, such that an injured Beneficiary can recover losses caused by Trustee misconduct through legal proceedings designed to remove the Trustee and assess damages against the Trustee personally. Of course, for this to happen, timely legal proceedings must be initiated by a Beneficiary.
If you have questions about Trustee misconduct or Trust losses, please feel free to give us a call at 1-800-306-6010 or contact us online.
