Detailed Answer
Trustees in Arkansas owe strict fiduciary duties to beneficiaries. Under Arkansas Code Ann. §28-73-103 (Duty to administer trust in good faith and in accordance with its terms), a trustee must act loyally, prudently, and impartially. Misusing trust assets violates these duties and constitutes a breach of trust.
Beneficiaries can challenge a trustee’s misconduct through the following steps:
- Demand a formal accounting. Arkansas Code Ann. §28-73-810 (Duty to keep and render accounts and statements) allows beneficiaries to request a detailed report of all trust receipts, disbursements, investments, and transactions. Send a written demand to the trustee. If the trustee refuses or provides an incomplete accounting, you may file a petition in chancery court.
- File a judicial proceeding. Under Arkansas Code Ann. §28-73-801 (Judicial proceedings relating to trust administration), beneficiaries may petition chancery court for relief against a trustee. Common remedies include surcharge, removal, or injunctive relief.
- Seek a surcharge. If you prove the trustee misapplied funds or acted in self-interest, the court can order financial liability under Arkansas Code Ann. §28-73-813 (Court’s power to surcharge for breach of trust).
- Move to remove the trustee. Persistent misconduct, unfitness, or material breach of trust terms are grounds for removal under Arkansas Code Ann. §28-73-1007 (Removal of trustee). A successful petition can lead to appointment of a successor trustee.
- Pursue equitable remedies. In extreme cases, the court may impose a constructive trust or require restitution to restore diverted assets.
Each step requires clear evidence: trust documents, bank statements, correspondence, and witness testimony. Deadlines may apply, so begin promptly.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified Arkansas attorney to discuss your specific situation.
Helpful Hints
- Gather all trust documents and financial records before contacting the trustee or court.
- Review the trust instrument for notice requirements and deadlines.
- Consider mediation or alternative dispute resolution to minimize costs and delay.
- Act quickly to avoid missing the statute of limitations on fiduciary claims (often five years in Arkansas).
- Consult a licensed Arkansas attorney for guidance on drafting petitions and courtroom procedures.