Detailed Answer
Under Oregon law, a trustee owes strict fiduciary duties to beneficiaries. Those duties include loyalty, prudence, impartiality and transparency under ORS 130.710. If a trustee misuses trust funds, beneficiaries can take these steps to challenge and correct the breach:
- Request a formal accounting. Beneficiaries may demand a full, written accounting of trust assets and transactions under ORS 130.780. This accounting reveals misappropriation and sets the record straight.
- Petition for removal of the trustee. If the trustee’s misuse constitutes a breach of trust, the court may remove the trustee under ORS 130.750. You must file a petition in the circuit court where the trust is administered or where the trustee resides.
- Seek surcharge for losses. Under ORS 130.765, the court can require the trustee to repay misused funds and lost earnings. A surcharge compensates the trust for damage caused by breach of fiduciary duty.
- Bring a separate breach-of-fiduciary-duty action. If misappropriation exceeds the trust’s assets, beneficiaries can sue the trustee personally for damages in civil court.
- Consider alternative dispute resolution. If the trust agreement allows, mediation or arbitration can resolve disputes faster and at lower cost than litigation.
Before filing any action, beneficiaries should gather all trust records, correspondence and financial statements. Document every instance of suspected misuse. Consult with an Oregon attorney experienced in trust law to review your evidence and guide you through court procedures.
Helpful Hints
- Keep detailed records of all trust transactions and communications.
- Send written requests for accounting; certified mail creates proof of delivery.
- Review trust documents for clauses on dispute resolution.
- Be mindful of statute-of-limitations deadlines in Oregon.
- Consider informal discussions or mediation before court filing.
- Consult a local attorney early to protect your rights.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to address your specific situation.