Being a trustee is a massive responsibility, one that shirking or abusing can have serious consequences for the value of a trust and its beneficiaries. When a trustee violates the duty they owe beneficiaries, they can be held personally liable for any resulting damages.
A trustee can be held liable for damages arising from self-dealing, conflicts of interest, negligent investments, misappropriation of assets, failure to follow trust terms, failure to keep beneficiaries informed, and other duty breaches.
For a free case review from the Heyman Law Firm, call our fiduciary litigation attorneys today at (410) 305-9287.
Can You Hold a Trustee Personally Liable in Maryland?
Trustees owe trust beneficiaries a “fiduciary duty,” meaning they must operate a trust with beneficiaries’ best interests in mind. If the trustee breaches their fiduciary duty and causes you damages, you can hold them personally liable.
To hold a trustee personally liable, you must file a lawsuit against them within the statute of limitations, which is typically three years for breach of fiduciary duty claims in Maryland.
If you suspect misconduct or negligence on the trustee’s behalf, our lawyers can investigate further and identify breaches of fiduciary duty you may not have recognized by yourself.
What Conduct Can You Hold a Trustee Personally Liable for in Maryland?
You can hold a trustee personally liable for any breach of fiduciary duty that causes you to incur damages in Maryland.
Self-Dealing
The trustee’s duty is to act with your interests as the beneficiary, and not their own. Self-dealing by using trust assets for personal gain can lead to losses for beneficiaries, which a lawsuit can help cover.
Conflicts of Interest
Having conflicts of interest and putting personal interests over those of the trust is another common breach of fiduciary duty, including using trust funds to invest in a personal business or favoring one beneficiary over another.
Negligence
Negligence when managing a trust, its assets, and its investments also warrants litigation against liable trustees. Negligence can lead to significant losses from bad investments and other instances of trust mismanagement.
Misappropriating Assets
Changing asset ownership from the trust to the trustee against the trust’s instructions is a major breach of fiduciary duty and often is grounds for a lawsuit in Maryland.
Failure to Follow Trust Terms
You can also hold a trustee liable for a breach of fiduciary duty due to failure to follow trust terms. Trust documents provide detailed instructions for managing the trust and distributing assets to beneficiaries. It’s the trustee’s obligation to follow these instructions exactly; otherwise, they can be personally liable for any damages to beneficiaries.
Failure to Inform Beneficiaries
Failure to inform beneficiaries of trusts and provide accountings is a common breach of fiduciary duty and often indicates that another, potentially more egregious breach occurred that the trustee is attempting to hide from beneficiaries, such as making a very bad investment or changing an asset’s ownership without permission.
What Do You Have to Prove to Hold a Trustee Personally Liable?
We must prove four essential elements for beneficiaries to win claims against unfit trustees.
Fiduciary Duty
First, we must establish that the defendant owed you a fiduciary duty, which we can largely do by relying on trust documents that name them as the trustee and you as a beneficiary.
Breach of Fiduciary Duty
Second, we must prove how the defendant breached their fiduciary duty. Evidence of a breach often includes trust documents, changes in asset titles and property deeds, correspondence between the trustee and the beneficiary, the trustee’s personal bank statements, and witness statements.
Causation
Third, we must prove that the defendant’s breach of fiduciary duty is what directly caused your damages as a trust beneficiary. We will also use financial records, correspondence, and witness statements to prove the link between your very real losses and the defendant’s conduct.
Damages
Finally, we must prove that you suffered damages as a result of the defendant’s breach of fiduciary duty. For example, we may show how the value of the trust or its assets has decreased due to the trustee’s poor decisions, or that you received the wrong amounts in distributions.
FAQs About Holding a Trustee Personally Liable in Maryland
How Long Do You Have to Hold a Trustee Personally Liable?
The statute of limitations for filing a lawsuit for breach of contract or fiduciary duty against a trustee is three years in Maryland.
What Economic Damages Can You Hold a Trustee Personally Liable For?
You can hold a trustee personally liable for losses from bad investments, unfair distributions, and other losses from mismanagement or misappropriation.
Can You Get a Trustee Removed After Holding Them Liable in Maryland?
Trust documents often name a replacement trustee; if none is named, the court will appoint one after the original trustee is removed.
Do You Need a Lawyer to Hold a Trustee Personally Liable?
The trustee might be intentionally non-communicative, provide inaccurate accountings, and be difficult in many other ways when beneficiaries attempt to hold them liable without an attorney. We can use the lawsuit to compel information and documents from the trustee that help your case.
How Do You Know if You Can Hold a Trustee Personally Liable?
It’s normal for beneficiaries to be somewhat unfamiliar with what’s expected and required of a trustee as a fiduciary. Describe the trustee’s conduct to our fiduciary litigation attorneys to determine if they have breached their duty and can be held personally liable for your damages in a lawsuit.
What Evidence Do You Need to Hold a Trustee Liable in Maryland?
In a lawsuit against a trustee for breach of fiduciary duty, our lawyers may use the following evidence:
- Trust account statements
- Trustee bank account statements
- Phones calls
- Text messages
- Emails
- Witness statements
Contact Our Lawyers for a Free Case Review in Maryland
Call (410) 305-9287 for a free case evaluation from the Heyman Law Firm’s fiduciary litigation attorneys today.