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Fiduciary wrongdoing: What are the legal remedies?

On Behalf of | May 31, 2018 | Executors, Fiduciaries, Probate Litigation, Trust Administration |

Wrongdoing by trustees and personal representatives can take many forms. It could be outright theft from an estate or a long-term scheme to embezzle funds from a trust. The wrongdoing might be hard to uncover if it involves decisions that routinely favor one beneficiary over another or self-dealing, such as purchasing a vehicle at lower than a fair market price.

When someone breaches their fiduciary duty – which encompasses three parts: duty of loyalty, duty of impartiality and duty of care – you may need to sue. What are the available legal remedies? We’ll explain in this post.

Removal of a fiduciary

When you spot issues quickly, it is possible to ask the court to remove a trustee or executor. If a trustee has been a day trader and believes this is a safe investment strategy for trust funds, it should lead to questions about whether this could jeopardize the trust. Colorado follows a prudent investor framework that requires a trustee to exercise “reasonable care, skill and caution.”

Commingling funds from an estate into personal accounts is another issue that might indicate someone does not fully understand their fiduciary duty. If the fiduciary is a family member, requesting appointment of a professional fiduciary might provide a solution.

Request for an accounting

Anyone with an interest in a trust, can ask the court to order a trustee to prepare a detailed accounting. This is a tool to review investment performance, disbursements and fees associated with management.


When a trustee steals funds from a trust, an immediate request for an injunction can preserve what remains. This usually requires:

  • Showing a high probability of success on the merits of the case, and
  • A significant risk exists in maintaining the status quo.

And then this leads into the last type of remedy.

Seeking Damages

Fiduciaries who misuse funds can be held personally liable. In determining whether to seek a judgment, it is important to consider the likelihood you will be able to collect. The expression you can’t squeeze blood from a turnip comes to mind here, because it is sometimes nearly impossible to recover money that has already been spent. This is where the injunction can be crucial to preserving what remains in an account.

At the first indication of fiduciary wrongdoing, immediately speak with an experienced probate attorney. By speaking with someone who handles these types of issues routinely, you can get a better sense of the available options to make an informed decision.