When a person in California creates an estate plan, one document they might consider executing is a trust. A trust is overseen by a trustee. However, after a trust is created, the trustee must uphold his or her fiduciary duty. The failure to do so could lead to trust litigation. The following post will provide a brief overview of how a trust is created, and what a trustee’s fiduciary duty entails.

The creation of a trust is relatively straightforward, even if the terms of the trust itself are complex. In a trust, a person, the grantor, transfers legal ownership of the assets placed in a trust to the trustee. The trustee must manage these assets in a way that benefits the trust beneficiaries. Of course, with the wide variety of revocable and irrevocable trusts out there, the actual language of the trust sometimes needs to be quite complex in order for the trust to serve the purpose the grantor wants it to.

When a trust is formed, the trustee owes a fiduciary duty towards the trust beneficiaries. This means that the trustee cannot engage in self-dealing or mismanagement of trust funds. The trustee must act in a manner that puts the beneficiaries’ interests first. If a trustee breaches their fiduciary duty, it could lead to trust litigation.

If the beneficiaries to a trust have reason to believe the trustee failed to meet his or her fiduciary duties, the beneficiaries can pursue a lawsuit against the trustee for the damages they suffered. Unfortunately, trustees can breach their fiduciary duty even in the most carefully drafted trust. Such a breach could seriously affect the value of the grantor’s estate, and through that, the financial interests of the trust beneficiaries. So, when a trustee breaches their fiduciary duty, sometimes trust litigation is an option the trust beneficiaries will consider, as a means of recouping the damages they suffered.