How can beneficiaries challenge a trustee who misuses trust funds under Montana law? | Montana Estate Planning | FastCounsel
MT Montana

How can beneficiaries challenge a trustee who misuses trust funds under Montana law?

Disclaimer: This content is for educational purposes only and does not constitute legal advice.

Detailed Answer

Under Montana law, trustees owe beneficiaries a duty of loyalty and must administer trust assets in beneficiaries’ best interests. These duties include avoiding self-dealing, misappropriation of assets, and conflicts of interest. See § 72-38-803, MCA.

When a trustee misuses trust funds—for example, by making unauthorized distributions, engaging in self-dealing, or failing to keep accurate records—a beneficiary can take the following steps to challenge the misconduct:

Step 1: Gather Documentation

Review the trust document and collect relevant bank statements, trust account records, correspondence, and other evidence showing how the trustee handled funds.

Step 2: Demand an Accounting

The Montana Uniform Trust Code requires trustees to keep clear, accurate records and provide information to beneficiaries. You may request a formal accounting in writing. If the trustee refuses, you can petition the district court to compel an accounting under § 72-38-1001, MCA.

Step 3: Seek Judicial Relief

If informal efforts fail, file a petition in the Montana district court where the trust is administered. Under § 72-38-1001, MCA, beneficiaries may request:

  • Removal of the trustee for breach of fiduciary duty (§ 72-38-807, MCA),
  • Surcharge or restitution for losses caused by misuse of trust assets, and
  • Other equitable relief the court deems appropriate.

Step 4: Consider Alternative Dispute Resolution

Courts encourage mediation or settlement discussions. Resolving disputes outside court can save time and reduce legal expenses.

Helpful Hints

  • Document all communications and keep copies of every trust record.
  • Act promptly: Montana law may impose deadlines for challenging trustee actions.
  • Review the trust instrument carefully for specific notice or venue requirements.
  • Consider consulting an attorney experienced in Montana trust litigation.
  • Explore mediation or arbitration clauses to resolve disputes efficiently.

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney.