A trust is an arrangement where the creator of the trust establishes a relationship with a third-party, or trustee, to manage assets or property for the benefit of another, called a beneficiary. Trusts are commonly established to pass an inheritance from parent to child, where the child is minor, financially immature, or has an intellectual disability.
The trustee is a fiduciary to the beneficiary, meaning that he or she must make decisions that are in the best interest of the beneficiary. The trustee may be compensated for performing this duty, however, the trustee is prohibited from certain actions that result in self-dealing. Self-dealing is a transaction executed by the trustee for his or her benefit, rather than for the benefit of the beneficiary; it violates the fiduciary duty of loyalty, or the duty to act in the best interest of the beneficiary.
Unfortunately, too often neither the creator nor the beneficiary (or beneficiaries) monitor the actions of the trustee, which results in the depletion of the trust. Often beneficiaries remain unaware of the self-dealing until they have little to no assets remaining for their care.
Once the self-dealing is discovered, both civil and criminal actions may be appropriate. Because trust law involves a long history of complicated case-law, the impacted beneficiary or his or her guardian should consult an experienced attorney in the area of trust law litigation.
If you have reason to believe that self-dealing has impacted the trust assets managed for the benefit of you or someone you know and need experienced counsel, please contact us for a consultation.