Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
Under Wisconsin law, a trustee owes strict fiduciary duties to beneficiaries. If a beneficiary suspects that a trustee has misused trust funds—such as through self-dealing, unauthorized distributions, or negligent investment—they can pursue several legal remedies.
1. Demand a Formal Accounting
Wisconsin Statute §701.1004 grants beneficiaries the right to request a formal accounting of all trust activity. If the trustee fails to comply, beneficiaries may petition the circuit court to compel the accounting and review all transactions. See Wis. Stat. §701.1004.
2. Petition for Removal of the Trustee
Under Wis. Stat. §701.1006, a beneficiary may ask the court to remove a trustee who is unfit, unwilling to serve, or persistently breaches their duties. The court considers settlor intent, conflicts of interest, and whether removal best serves the trust’s purposes. See Wis. Stat. §701.1006.
3. Seek a Surcharge or Monetary Relief
If the trustee’s misconduct causes financial loss, beneficiaries can ask the court to surcharge (financially penalize) the trustee under Wis. Stat. §701.1007. A surcharge requires the trustee to repay misused funds plus interest. See Wis. Stat. §701.1007.
4. Obtain Equitable Remedies
Circuit courts have broad equitable powers to freeze trust assets, enjoin further misconduct, or appoint a special fiduciary. Beneficiaries file a petition outlining breaches of duty and request specific injunctive relief.
5. Explore Alternative Dispute Resolution
Many trusts include mediation or arbitration clauses. ADR can be faster and less expensive than litigation, and it may preserve family relationships.
Helpful Hints
- Document all communications and transactions related to the trust.
- Review the trust document for notice requirements and deadlines.
- Act promptly—statutes of limitations may bar claims after a certain period.
- Consider mediation before filing a court petition.
- Consult an attorney experienced in Wisconsin trust litigation to protect your rights.