Trusts can serve many purposes, such as protecting family wealth, shielding assets from loss, and providing for beneficiaries both during life and at death. At other times, beneficiaries may question whether a trustee is properly handling trust assets or administering the trust in accordance with Louisiana law. In these moments, they may wonder: When can a beneficiary sue a trustee in Louisiana?
Trustee Duties in Louisiana
By law, a trustee must administer a trust according to its terms for the benefit of the beneficiaries. A trustee owes fiduciary duties to the trust beneficiaries. In Louisiana, a trustee’s fiduciary duties include acting with honesty, loyalty, and prudence when administering trust property. Trustees should do the following:
- Carefully manage trust assets
- Keep beneficiaries informed
- Administer the trust according to its terms
- Preserve trust property
- Avoid conflicts of interest
When trustees fail to meet these standards, beneficiary disputes can occur. Some disagreements are due to normal misunderstandings. Others are serious and involve accusations of self-dealing, hiding money, or ruining a trust through bad investment decisions.
Fiduciary duties are taken very seriously by Louisiana judges. Trustees are charged with managing another person’s money and property. They are not supposed to benefit from that position outside of normal trustee fees. When trustees violate fiduciary obligations, the courts can intervene on behalf of beneficiaries.
Why a Beneficiary May File a Claim Against Trustees
Beneficiaries cannot file a claim against a trustee just because they are unhappy with how a trust is being administered. There are some circumstances under which beneficiaries can hire a fiduciary litigation lawyer and file a claim against a trustee. Beneficiaries most commonly file a claim against trustees for the following reasons:
- Mismanagement of assets. Beneficiaries should be provided with regular accountings and have the right to ask questions about trust administration. If a trustee suddenly refuses to cooperate or share information, it could be a red flag that trust assets are at risk.
- Not following the terms of the trust. Sometimes, trustees delay distributions without a good reason, or a trustee may show favoritism to certain beneficiaries. Trust administrators should never ignore the instructions set forth by the trust document.
- The trustee is no longer available to serve. Family members or beneficiaries questioning the trustee’s judgment may have grounds to file a claim. Health issues, incapacitation, and substance abuse can affect a person’s ability to serve in this role.
- Using trusts for personal benefit. Trustees should never use trust assets for their personal benefit. This is known as self-dealing. Examples include transferring trust property to themselves, borrowing money from a trust, and using trust funds to pay for personal expenses.
Financial misconduct involving investments and personal assets remains a growing concern nationwide. In 2024, consumers reported losing over $12.5 billion dollars to fraud to the Federal Trade Commission (FTC), marking a 25% increase from the previous year. Investment scams alone cost victims an estimated $5.7 billion. With an increase in scams related to finances and investments, trust and estate disputes may grow more complicated.
Remedies for Trustee Litigation
Beneficiaries who prove that a trustee breached his or her fiduciary duties may receive a variety of remedies from the court. Some common remedies include:
- Removal of the trustee
- Replacement of the trustee
- Repayment of lost trust money
- Court-ordered accounting
- Suspension of trustee powers
- Clawback of trust assets
Depending on the circumstances surrounding a breach of fiduciary duties, additional damages may be awarded. Remedies are meant to make the trust whole again and protect beneficiaries in the future. When properly drafted, trusts are meant to last for many years. If beneficiaries believe that trust assets are in immediate danger, they can ask the court for emergency relief.
About Hymel Davis & Petersen
With over 100 years of collective legal experience, we help individuals, businesses, and organizations resolve complex litigation throughout Louisiana and nationwide. Our founding members are former federal prosecutors and seasoned trial attorneys who focus their practice on complex commercial disputes, trusts and estates litigation, business conflicts, and breaches of fiduciary duties.
The attorneys at Hymel Davis & Petersen include former Assistant U.S. Attorneys, former state prosecutors, and a former Judge of the 19th Judicial District Court.
FAQs About Can a Beneficiary Sue a Trustee in Louisiana
Can Beneficiaries File a Claim Against a Trustee?
Yes, beneficiaries can file a claim against a trustee whom they feel has breached fiduciary duties or mismanaged a trust. Self-dealing, mixing trust funds with personal ones, neglecting to give accountings, or making wrong payouts are all potential grounds. Louisiana trustee law allows the removal of a trustee and/or recovery of damages or other action by the court when there has been misconduct or mismanagement of a trust.
How Long Does a Beneficiary Have to Dispute a Trust?
The statute of limitations to challenge a trust varies depending on the type of claim and the facts of the case. In Louisiana, the specific timeframes for challenging a trust can differ, especially if your claims involve fraud, a breach of your trustee’s duties, or errors in how the trust was managed. Some claims may not become available until after beneficiaries receive accounting and disclosures from the trustee.
How Can Trust Litigation Be Avoided?
Trust litigation can be avoided if the trustee keeps detailed records, communicates with beneficiaries about trust administration, administers the trust according to its terms, and avoids engaging in self-dealing. Trustees who administer trusts transparently and adhere to their fiduciary duties may have fewer conflicts with beneficiaries that lead to legal disputes.
Can a Beneficiary Remove a Trustee in Louisiana?
Yes, a beneficiary can have a trustee removed by Louisiana state courts if there is evidence of malfeasance, incompetence, conflicts of interest, or failure to administer a trust properly. Beneficiaries who want to have a trustee removed typically need to show that the trustee’s behavior is adversely affecting the trust or breaching fiduciary duties. A new trustee may also be appointed by the courts to preserve trust property and ensure proper administration.
Hire a Fiduciary Litigation Lawyer Today
Trust beneficiary disputes often involve analysis of the trust itself, accountings, correspondence, and Louisiana fiduciary law. When people hire a Louisiana fiduciary litigation attorney, they often have concerns about a lack of transparency, protection of assets, or self-dealing by the trustee. At Hymel Davis & Petersen, we can help you understand trustee laws if you suspect misdealings. Contact us today for more information.
