Trustee Duties – Duty of Loyalty

As one of Southern California’s premiere trust and estate litigation law firms, we have the unique perspective of seeing a wide range of trustee misdeeds that significantly affect the intended gifts of trust beneficiaries. It is not uncommon for trustees to ignore trust instructions and spend the funds from the sale of the trust property for their own personal use instead of distributing it to the trust beneficiaries. If you suspect a trustee, you have limited time to engage an experienced attorney like Max Alavi, Attorney at Law, APC to help you hold the trustee to task for their wrongful and illegal actions.

What is a trustee?

A trustee is a person who manages a trust for the trust beneficiaries. Trustees have fiduciary duties. This means that trustees must take legal responsibility for their actions when they manage the trust. There are a few different kinds of trustee fiduciary duties, like duty of loyalty, duty of care, duty of impartiality, and duty to inform and account to beneficiaries. In this blog post, we will discuss the duty of loyalty.

What is the duty of loyalty?

California Probate Code section 16002 says that a trustee has a duty to administer the trust solely in the interest of the beneficiaries. This means that when a trustee takes action to manage the trust, like when they sell, transfer, or invest a property that is in the trust, they have to make sure that their actions are in the trust beneficiaries’ best interest.

A Case Study

Uzyel v. Kadisha (2010) is a recent California case that gives a great example of a trustee who definitely breached his trustee fiduciary duty of loyalty. Dafna Uzyel became widowed when she was 28 years old and had to support her two young children. She did not complete high school, spoke limited English, and had no financial or business experience. To pay for her living expenses, Dafna created two trusts and named a family friend, Neil Kadisha, as the trustee, and named herself and her two children as the beneficiaries. As a trustee, Kadisha had the fiduciary duty of loyalty to manage the trust in the best interests of Dafna and her two children. However, Kadisha did not perform his duty of loyalty. He used trust funds to purchase shares of a company called Qualcomm. This was a risky investment because Qualcomm often experienced financial difficulties. After Kadisha sold Qualcomm stock for nearly $800,000, as the trustee, Kadisha loaned the money to himself under a fake name and used the money for his own personal use. Ultimately, the California court determined that Kadisha breached his duty of loyalty by selling the Qualcomm shares solely for his own benefit and not for the benefit of Dafna and her two children.

Protect Your Inheritance with OC Trusts Lawyer: A Successful Trust Litigation Law Firm

A trustee’s duty of loyalty is very important. As a trust beneficiary, you are entitled to enjoy your share of the trust property, and the trustee has a legal duty to make this happen for you. Like how the California court explained in Uzyel v. Kadisha, trust beneficiaries can be vulnerable to self-dealing and other abuses by trustees because beneficiaries often do not have the financial knowledge and experience in managing trust assets. If you believe a trustee is interfering with your rightful interest in a trust, talk with the knowledgeable trust litigation attorneys at Max Alavi, OC Trusts Lawyer to see how we can protect your inheritance and your future.