Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for advice about your situation.
Detailed Answer
In Texas, beneficiaries who suspect a trustee of misusing trust funds can enforce their rights under the Texas Property Code. Chapter 114 of the Texas Property Code (Proceedings to Enforce Rights of Beneficiaries) provides the statutory framework for relief. Key remedies include removal of the trustee, surcharge for losses, and compelling an accounting.
1. Demand an Accounting
First, request a formal accounting. Under Tex. Prop. Code Ann. § 113.053, a trustee must deliver annual or event-driven account statements. If the trustee fails to comply, beneficiaries can petition the court to compel one under Tex. Prop. Code § 114.002.
2. File a Petition in Court
If informal efforts fail, file a suit in the district court where the trust is administered. Cite Chapter 114 to request one or more of the following:
- Removal of the trustee: For breach of trust or incapacity (Tex. Prop. Code § 114.007).
- Surcharge: Monetary recovery for losses caused by trustee misconduct (Tex. Prop. Code § 114.004).
- Injunctions: Prevent further improper transactions.
- Authorization of transactions: Seek court approval for disputed acts under Tex. Prop. Code § 114.011.
3. Prove Breach of Fiduciary Duty
Trustees owe duties of loyalty and prudence. Misuse of funds—self-dealing, unauthorized investments, or commingling assets—violates these duties. Gather evidence such as bank records, investment statements, and communications.
4. Statute of Limitations
Under Tex. Civ. Prac. & Rem. Code § 16.051, beneficiaries generally have four years to bring a suit for breach of fiduciary duty. Timely action preserves your rights.
Helpful Hints
- Document all requests and responses. Send written demands for accounting via certified mail.
- Track key dates to avoid missing the statute of limitations.
- Gather clear evidence—financial statements, emails, and trustee reports.
- Discuss co-beneficiaries’ concerns and coordinate strategy.
- Consider mediation before filing suit; some courts urge alternative dispute resolution.
- Hire a Texas probate or trust attorney familiar with Tex. Prop. Code Chapters 113–115.