Suing a Trustee for Improper Distributions: Bay Area Beneficiary Rights

by Michael Hackard

Publication Date November 3, 2026 in Beneficiary Disputes

When a Trustee Fails You

I am Michael Hackard, founder of Hackard Law, and for fifty years I have fought for beneficiaries whose trustees have misused the authority placed in their hands. I have written four books on inheritance protection and produced more than 1,000 educational videos that have reached over seven million viewers. My firm serves families throughout Sacramento, the San Francisco Bay Area, and Los Angeles  –  communities where trust disputes can erase a lifetime of careful planning in a matter of months.

If you are a trust beneficiary in the Bay Area and you suspect a trustee is improperly withholding distributions, you are not powerless. California law gives beneficiaries meaningful tools to hold trustees accountable, compel distributions, and recover losses  –  including, in some cases, from the trustee personally.

Hackard Law provides contingency fee representation for qualified trust and estate cases, meaning no upfront costs to you. To find out whether your situation qualifies, call us today at (916) 313-3030.

Quick Summary

Trustees hold a fiduciary duty to beneficiaries, and violations of that duty open the door to legal action. California courts recognize both the duty of care and the duty of loyalty as enforceable obligations.

• A trustee cannot withhold distributions arbitrarily or in bad faith
• Beneficiaries may seek compensation for losses caused by trustee misconduct
• Courts can remove a trustee who breaches fiduciary duties
• Personal liability against the trustee is possible in serious cases
• Acting quickly matters  –  delay can limit your recovery options

What a Trustee Is Actually Required to Do

A trustee is not simply an administrator. Under California law, a trustee is a fiduciary  –  a person legally obligated to act in the best interests of the beneficiaries, not their own. This obligation has two core components.

The duty of care compels a trustee to manage trust assets as a reasonably reasonable investor would do. That involves sound investment decisions, proper record-keeping and transparent accounting. This obligation is breached by a trustee that wastes trust assets, makes speculative investments or just neglects the portfolio.

The duty of loyalty goes further. A trustee must not place their own financial interests  –  or the interests of friends and family  –  above those of the beneficiaries. Self-dealing, hidden fees, and diverting trust assets to third parties are all potential violations. When either duty is breached, beneficiaries have grounds to act.

Families in Alameda County and across the Bay Area dealing with these issues can find information about their litigation options through Alameda County estate litigation resources.

Improper Withholding of Distributions

A trustee does have some discretion over when and how to distribute trust income  –  but that discretion has limits. When a trustee withholds distributions without a legitimate reason, delays payments indefinitely, or favors certain beneficiaries over others, those actions may constitute a breach of fiduciary duty.

Beneficiaries who are not receiving distributions to which they are entitled may make a claim in probate court. The court may order the trustee to make distributions, to give a comprehensive account of trust assets, and to pay damages for losses incurred by reason of the illegal withholding. In extreme instances the trustee may be held personally accountable.

Case Pattern: Bay Area Family Trust Trustee Self Deal

A parent died and a successor trustee took over management of their parent’s trust. During the next year, the trustee made no distributions to the adult children, who were named beneficiaries of the trust, saying money had to be kept in the trust for ongoing expenses. When the beneficiaries eventually got an accounting, they discovered that the trustee had been using trust monies to pay personal expenses. The beneficiaries sued, the trustee was dismissed by the court, and she was held personally accountable for the diverted amounts.

Removing a Bad Trustee

One of the most effective remedies accessible to beneficiaries is the dismissal of the trustee. The California Probate Code offers courts wide latitude to remove a trustee who has breached fiduciary obligations, become incapable, or whose continued employment would be contrary to the interests of the trust or its beneficiaries.

Removal is not just a financial remedy  –  it is a protective one. A trustee who remains in place while misconduct is under investigation can continue to dissipate assets, destroy records, or take retaliatory action. Seeking an emergency order to suspend the trustee’s authority is often the first step Hackard Law takes when misconduct is suspected.

For Bay Area families navigating these disputes in Santa Clara County, trust and will contest representation in Santa Clara may also be relevant depending on the nature of the challenge.

Case Pattern: Trustee Removal After Unexplained Asset Losses

A trustee of a multi-beneficiary trust in the East Bay neglected to file accountings for three years running. When the beneficiaries ultimately were able to obtain an accounting in court, a considerable amount of trust assets were unaccounted for. The trustee was ousted by the court, which appointed a professional fiduciary to run the trust during litigation over the stolen assets.

What Happens When You First Suspect Misconduct

The moment you begin to suspect that a trustee is acting improperly, it can feel disorienting. You may not have access to trust records. You may not know what the trustee has been doing. You may worry that raising concerns will create family conflict.

Those fears are certainly valid but delay is expensive. The longer the wrongdoing goes on, the more assets can be frittered away and the harder it is to claw back. California law provides that beneficiaries may seek a trust accounting. A trustee who refuses to give an accounting is already in breach of his responsibilities.

I have seen this pattern so many times – a beneficiary waits months or years before coming for help, believing the matter would fix itself. It seldom does. The cost in money is mounting, and the break in families is sometimes too great for any judgment to repair. Don’t wait to act – it’s not only legally wise, it’s the only way to make sure you get what your loved one wanted you to have.

Learning the five essential things California trust beneficiaries must know is a strong starting point for anyone in this position.

Key Definitions

• Fiduciary duty: The legal obligation of a trustee to act in the best interests of the trust beneficiaries at all times.
• Duty of care: The requirement that a trustee manage trust assets with the same prudence a reasonable investor would apply.
• Duty of loyalty: The prohibition against a trustee placing their own interests, or those of third parties, above the interests of beneficiaries.
• Trustee removal: A court-ordered termination of a trustee’s authority, available when the trustee has breached duties or become unfit to serve.
• Breach of fiduciary duty: Any act or omission by a trustee that violates their legal obligations to the beneficiaries.
• Personal liability: The exposure of a trustee’s own assets to satisfy a judgment when misconduct caused losses to the trust.
• Trust accounting: A formal record of all trust assets, income, expenses, and distributions that a trustee is required to provide to beneficiaries.
• Discretionary distribution: A distribution that a trustee has the authority  –  but not necessarily the obligation  –  to make, subject to the terms of the trust.
• Probate court: The California court with jurisdiction over trust and estate disputes, including trustee misconduct claims.
• Contingency fee: A fee arrangement in which the attorney is paid only if the case results in a recovery, with no upfront cost to the client.

What to Do Next

• Look for any trust documents you have received and review the distribution provisions carefully.
• Get copies of any accountings, statements, or correspondence from the trustee.
• Write down a timeline of events  –  when distributions stopped, what the trustee has said, and what assets you believe are in the trust.
• Try to avoid confronting the trustee directly before speaking with an attorney, as this can complicate litigation strategy.
• Look into your right to demand a formal trust accounting under California Probate Code Section 16062.
• Try to gather any financial statements, tax returns, or bank records related to the trust that you can access.
• Consider whether other beneficiaries share your concerns  –  coordinated action is often more effective.
• Review the contingency fee representation guide to understand your options for funding litigation.
• Learn more about how to choose the right probate lawyer for your specific situation.
• Call Hackard Law at (916) 313-3030 to discuss your case with our team.
• You can also reach us through our contact page to request a free consultation.

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