The duty of a trustee is to manage the assets in a trust in accordance with the terms designated for the benefit of the trust’s beneficiaries.
If you set up a living trust for yourself and are the beneficiary, you have the right to take money or assets from it as you choose. However, if you are the trustee of a trust that’s been set up for someone else, removing funds, even if you intend to replace them, is considered embezzlement. California law defines embezzlement as fraudulently appropriating property entrusted to you but belonging to someone else.
Those convicted of embezzling from a trust can face criminal penalties including prison time. They can also face civil sanctions and have to pay restitution and penalties.
It can be tempting to “borrow” money from a trust. Sometimes people find themselves in financial trouble and figure that no one will miss the money since they plan to repay it before the beneficiary needs or is entitled to receive it. However, that “borrowing” is still illegal.
Too often, older people — particularly those who are mentally incapacitated — become the victims of trust fund embezzlement by caregivers or even family members who assume that they’ll never miss the money. This is a form of financial elder abuse.
Beneficiaries have the right to seek information about the status of their trust if they have reason to believe that the trustee is not maintaining it legally. They can also ask a court to remove the trustee if there are grounds to do so. An experienced California estate planning attorney can provide legal guidance to help you protect the integrity of your trust or that of a loved one.
Source: Lake County News, “Estate Planning: Trustees who ‘borrow’ trust funds,” Dennis Fordham, Feb. 18, 2017