A trustee may have the right to sue a beneficiary for harassment if the beneficiary’s behavior is causing damage to the trust or hindering the trustee’s ability to satisfy their fiduciary duties and properly administer the trust.
That said, suing a beneficiary for harassment is an extreme measure that should be reserved for extreme situations. In short, it’s a remedy that’s typically only used as a last resort.
Suppose a family trust provides certain beneficiaries substantially greater inheritances than their counterparts. One beneficiary takes issue with this and begins barraging the trustee with threatening emails and phone calls. Despite having no evidence, he accuses the trustee of stealing from the trust and files groundless legal complaints to interfere with the administration of the trust. When these tactics fail to produce results for the beneficiary, he shows up uninvited to the trustee’s residence to confront her. Although the trustee had tried to deescalate tensions with the beneficiary on multiple occasions, the beneficiary persisted in intimidating her.
In this situation, it may be necessary to take extreme steps to keep trust administration on track. For example, the trustee may need to sue the beneficiary. While mere disagreements with a beneficiary are rarely cause for a trustee to take legal action against a beneficiary for harassment, a trustee should not tolerate a beneficiary’s behavior if it has become threatening, abusive or obstructive in any way.
When beneficiaries are dissatisfied with their inheritance, they often take out their frustrations on the trustee. The reality, however, is that the trustee has no say over who gets what (unless the trust is discretionary). Their job is simply to carry out the terms of the trust.
If you are a trustee who is being harassed by a trust beneficiary, consult with an experienced trust attorney about your legal options. You may be able to seek an injunction to block the beneficiary from contacting you and possibly even damages for any emotional distress they caused you. Damages may, likewise, be available if the beneficiary’s behavior resulted in financial losses to the trust.
When Can a Trustee Sue a Beneficiary?
A trustee can sue a beneficiary anytime the beneficiary’s behavior or actions are harming the trust or unnecessarily hindering its administration. In other words, harassment is not the only ground on which a trustee can sue a beneficiary.
That said, a trustee generally shouldn’t resort to suing a beneficiary unless they’ve made attempts to directly resolve the issues with the beneficiary first. There is a reason for this. Suing a beneficiary usually will require the trustee to use trust funds to litigate the dispute and could extend the length of administration.
Resolving problems with the beneficiary directly also could help to maintain harmonious relations with the beneficiaries of the trust as a whole. When the trustee is on good terms with the beneficiaries, administration tends to progress more smoothly.
Trustees who are facing problems with a beneficiary should maintain a log of all their correspondence with the beneficiary in the event they are forced to sue the beneficiary later. For the same reason, they also should always aim to communicate with the beneficiary in writing.
Violation of Trust Terms
Did a beneficiary defy the terms of their conditional inheritance?
When the terms of a trust require a beneficiary to abide by certain rules or conditions when spending their inheritance, the trustee could sue the beneficiary to recover the inheritance they previously had provided them if the beneficiary fails to abide by the terms set forth by the trust.
For example, if a trust provides a beneficiary with an inheritance under the condition that the inheritance be used only to fund their college education, the trustee could sue the beneficiary to recover any portion of the inheritance that was spent on something else.
Misappropriation of Trust Assets
Has a beneficiary stolen money belonging to a trust?
Have they collected rent on a trust property or income from a trust business?
When a beneficiary wrongfully takes money from a trust, the trustee can certainly sue the beneficiary to retrieve the stolen money, but they may have a right to collect damages as well.
Suppose a beneficiary has been collecting rent on trust property for six months, earning them $20,000 in all. If the trustee could have invested this money on behalf of the trust, the trust could have earned income to pass to the beneficiaries. This goes to show how a beneficiary’s small act of misappropriation can result in significant losses for a trust, and why it is necessary for trustees to take action if they believe a beneficiary to be stealing or misusing trust assets.
Eviction
Is a beneficiary refusing to vacate a trust property they are residing in rent-free?
If a beneficiary is residing in a trust property rent-free, it means the property cannot be leased to a tenant who would pay rent. This is effectively losing the trust money. Selling a property with a tenant can also complicate the sale and reduce the sales price, causing further damage to the trust.
While a trustee can certainly request that a beneficiary vacate a trust property, they may have no choice but to sue the beneficiary if they refuse to comply, take too long to comply or have already caused significant damage to the trust.
What Legal Remedies Can Trustees Seek Against Beneficiaries?
Unlike beneficiaries, who can seek suspension or removal of a trustee when they act improperly, trustees generally cannot seek to have a beneficiary disinherited. Their legal remedies are limited to injunctions, damages and awards of attorney fees and costs.
Injunctions
An injunction is a type of court order that requires a party to either do something or not do something.
For example, if a beneficiary is taking a specific action that is causing harm to the trust (e.g., pilfering income from a trust asset), an injunction can be issued to prevent them from doing so.
Damages
Damages are the amount of money a person is entitled to receive due to the harm or losses caused to them by another party.
For example, if a beneficiary is refusing to vacate a trust property they’ve been occupying rent-free, the trustee could seek damages to compensate the trust for the rental income the trust lost because of the beneficiary’s refusal to vacate the property. This may be offset against the beneficiary’s share of the trust.
Award of Attorney Fees and Costs
When a trustee sues a beneficiary, they usually are entitled to use trust funds to litigate. If the case goes to trial and the trustee wins, they may be able to seek an award of their attorney fees and costs from the beneficiary.
If the court grants the award, the beneficiary will need to reimburse the trust for attorney fees and costs rather than the trustee.
Trustee/Beneficiary FAQs
Still have questions about the rights of trustees and beneficiaries? Explore our frequently asked questions section below to see if you can find the answers you’re looking for there. If you are unable to, you can always reach out to our firm for personalized legal guidance.
Can you sue a trust in California?
Yes and no. In California, you generally cannot sue a trust directly, since a trust is a legal arrangement rather than a legal entity. It is generally the trustee who is responsible for litigating on behalf of a trust.
Can a beneficiary sue a trustee?
Yes, a beneficiary can sue a trustee if they suspect the trustee to be engaged in fiduciary misconduct.
To sue a trustee, the beneficiary must file a petition detailing the trustee’s alleged indiscretions, the harm these indiscretions allegedly caused the trust, and the legal remedies they are seeking to hold the trustee accountable.
Can someone sue an irrevocable trust?
Yes and no. As mentioned previously, an irrevocable trust cannot be sued directly, but legal action can generally be directed at the trustee rather than the trust itself.
What is an example of a trustee/beneficiary conflict of interest?
When a trustee is also a beneficiary, it can pose a potential conflict of interest, since the trustee’s financial interest in the trust could make it difficult for them to uphold their fiduciary duties to act in the collective best interests of the beneficiaries and treat all the beneficiaries equally.
For example, say a trustee has mismanaged a trust by allocating too much of the trust estate to himself as a beneficiary. Yet, he refuses to rectify the problem. In this scenario, the trustee has placed his own beneficial interests above his fiduciary obligations to uphold the trust, creating a conflict of interest.
Can a trustee sue on behalf of the trust?
Yes, a trustee generally has the power to sue on behalf of the trust. If they have the grounds to do so, they can sue a beneficiary, co-trustee or third party to recover money or property for the trust.
Can a trustee sue a beneficiary for occupying trust property?
Yes, a trustee can sue a beneficiary for occupying trust property if they are not paying rent or are not entitled to occupy the trust property.
The trustee not only can sue to have the beneficiary evicted from the property, but they can recover damages in the form of lost rent from the beneficiary as well.
Can a trustee remove a beneficiary from a trust?
No, a trustee removing a beneficiary from a trust is not permitted. Trustees are tasked with carrying out the terms of the trust exactly as they’re written. They cannot decide who is entitled to inherit and who isn’t unless they have discretionary powers, but even then, they cannot remove a beneficiary from a trust. They simply can opt to not provide a beneficiary with an inheritance.
Can a trustee withhold money from a beneficiary?
No, a trustee cannot indefinitely withhold money from a beneficiary unless the trust permits them to do so.
Still have questions about when a trustee can sue a beneficiary?
Suing a trust beneficiary as a trustee requires a thoughtful and strategic approach. On the one hand, it’s essential to address any beneficiary behaviors or actions that hinder trust administration; on the other, maintaining harmonious relationships with the beneficiaries is equally important.
At Keystone, our probate litigation attorneys specialize in resolving complex trust issues with skill and sensitivity. We’re committed to helping you achieve your legal objectives. Get in touch to learn how we can assist with your trust-related challenges.
