Trustees hold significant power over trust assets, but that power comes with strict legal obligations. When a trustee fails to meet those obligations, beneficiaries have legal rights to challenge trustee actions. Understanding when and how you can hold a trustee accountable is essential if you believe your interests have been harmed. Peck Ritchey, LLC‘s guide explains the grounds for challenging a trustee under Illinois law, including breach of fiduciary duty, accounting disputes, failure to distribute assets, and investment mismanagement.
Why Choose Peck Ritchey, LLC for Trustee Litigation
Peck Ritchey, LLC represents beneficiaries in trust disputes across Illinois. Our team understands the complexities of fiduciary duty claims and has experience handling accounting disputes, asset distribution issues, and investment mismanagement cases. We know the Illinois Trust Code (760 ILCS 3/) inside and out, and we bring local Chicago expertise to probate court proceedings. When your trust interests are at stake, you need an attorney who can navigate these disputes effectively. Call (312) 201-0900 to discuss your situation with our probate litigation attorneys.
Understanding Fiduciary Duty and Trustee Obligations
What Is a Fiduciary Duty?
A fiduciary duty is a legal obligation to act in someone else’s best interests. When a person becomes a trustee, they accept a fiduciary relationship with the beneficiaries. This means trustees must manage trust assets prudently and loyally, putting beneficiary interests ahead of their own. The Illinois Trust Code (760 ILCS 3/) establishes several core duties that every trustee must follow, including the duty of loyalty (Section 802), the duty of prudence (Section 804), and the duty of impartiality (Section 803). Understanding these duties is the first step in determining whether a trustee has breached their obligations. For comprehensive guidance on trustee responsibilities, consult with experienced trust litigation lawyers.
Common Trustee Duties Under Illinois Law
Trustees have several key responsibilities. The duty of loyalty requires trustees to avoid self-dealing and conflicts of interest. The duty of prudence means making reasonable investment decisions and managing assets carefully. Trustees must also account for their actions and provide beneficiaries with information about the trust. Finally, trustees have a duty to distribute assets according to the trust terms. When trustees fail in any of these duties, beneficiaries may have grounds to challenge trustee actions. For more information on how trustees can breach these duties, see our guide on breach of fiduciary duty.
Breach of Fiduciary Duty: The Foundation for Challenging a Trustee
A breach of fiduciary duty occurs when a trustee fails to meet their legal obligations. Common examples include self-dealing (using trust assets for personal benefit), conflicts of interest, and failure to communicate with beneficiaries. Under Illinois law, beneficiaries can prove breach by showing that the trustee failed to act as a prudent person would in similar circumstances. The Restatement (Third) of Trusts provides guidance on fiduciary standards that Illinois courts frequently reference.
The burden of proof falls on the beneficiary challenging the trustee. However, once a beneficiary shows that a trustee engaged in self-dealing or other suspicious conduct, the trustee must prove they acted properly. When a court finds breach of fiduciary duty, it can order the trustee to pay damages, return assets, or even remove the trustee from their position. If you believe a trustee has breached their duties, our probate litigation team can help you understand your options. Kerry Peck and our experienced attorneys have successfully represented beneficiaries in complex fiduciary duty cases.
Accounting Disputes and Failure to Distribute Assets
Trustees have a legal obligation to maintain accurate accounting records and provide beneficiaries with regular accountings. When trustees fail to provide required accountings, beneficiaries lose visibility into how their assets are being managed. Failure to distribute assets according to trust terms is another common problem that leads to trust litigation.
Delayed distributions can harm beneficiaries who depend on trust income or principal. If a trustee refuses to provide an accounting or delays distributions without a valid reason, beneficiaries can petition the court to compel the trustee to act. Courts can assess damages against trustees who fail in these duties. Peck Ritchey, LLC helps beneficiaries resolve accounting disputes and recover delayed distributions. For detailed information on trustee removal and other remedies, visit our page on the removal of executors, trustees, and agents under power of attorney. Our trust administration specialists can guide you through the process.
Under the new ITC, a trustee’s failure to provide an accounting effectively pauses the statute of limitations. The two-year clock only starts ticking once the beneficiary receives a report that “adequately discloses” the potential claim. This emphasizes why forcing an accounting is so important.
Investment Mismanagement and Imprudent Decisions
The Illinois Trust Code (760 ILCS 3/) requires trustees to follow the prudent investor standard when making investment decisions. This means trustees must invest trust assets as a prudent investor would, considering the trust’s purposes and the beneficiaries’ needs. Under the Prudent Investor Rule (760 ILCS 3/901-906), trustees must consider diversification, total portfolio return, costs, inflation, and tax implications. Concentrated positions in a single stock, excessive risk-taking, and failure to diversify trust assets can all constitute investment mismanagement.
Underperformance alone does not necessarily mean a trustee breached their duty. However, if a trustee made decisions that no prudent investor would make, or ignored clear warning signs about risky investments, beneficiaries may have a claim. When beneficiaries can show that a trustee’s investment choices violated the prudent investor standard, they can challenge those decisions in court. Our attorneys have extensive experience with trust construction, interpretation, and reformation cases involving investment disputes. Timothy Ritchey and Brandon Peck have successfully litigated complex investment mismanagement claims.
Legal Standing and Who Can Challenge a Trustee
Not everyone can challenge a trustee’s actions. You must have legal standing, which means you have a financial interest in the trust. Beneficiaries clearly have standing to challenge a trustee. Potential beneficiaries and contingent beneficiaries may also have standing in certain situations. Heirs and creditors can challenge a trustee in limited circumstances. Understanding your legal standing is crucial before pursuing trustee litigation.
Illinois law sets time limits for challenging a trustee. The deadline generally depends on when the trust became irrevocable or when the trustee accepted their appointment.
- Post-2020: For trusts becoming irrevocable (or trustees appointed) after Jan 1, 2020, the deadline is generally 2 years from receiving an adequate accounting.
- Pre-2020: For trusts that became irrevocable before this date, the old 3-year deadline often applies.
Contact Peck Ritchey, LLC at (312) 201-0900 to discuss your situation. Jesse Footlik specializes in time-sensitive trust disputes and can help you meet critical deadlines.
The Process for Challenging Trustee Actions in Illinois
Challenging a trustee begins with filing a petition in probate court. The petition must describe the trustee’s actions and explain why those actions violated their fiduciary duties. Before going to trial, many cases settle through mediation or negotiation. If the case proceeds to court, both sides will gather evidence through discovery. Understanding the probate litigation process is essential for beneficiaries.
Courts have several remedies available when they find that a trustee breached their duties. The court can remove the trustee, order an accounting, award damages to beneficiaries, require restitution of trust assets, or reduce the trustee’s compensation. The specific remedy depends on the nature and severity of the breach. Understanding what remedies apply to your situation is crucial, and (312) 201-0900 can help you evaluate your options. For more information on probate litigation strategies, visit our probate litigation page. Peter Coorlas brings decades of experience in securing favorable remedies for beneficiaries.
Frequently Asked Questions
Can a beneficiary challenge a trustee’s investment decisions?
Yes, if the trustee’s investment decisions violate the prudent investor standard or breach their fiduciary duty. However, beneficiaries must show that the decisions were imprudent, not simply that they underperformed. See our page on will contests for related information on challenging trust documents. For investment-specific disputes, review our trust construction and reformation resources.
What is the deadline for challenging a trustee in Illinois?
The deadline generally depends on when the trust became irrevocable or when the trustee accepted their appointment. The specific deadline depends on your situation and the nature of the claim. Don’t delay and contact our trust litigation team immediately.
What happens if a trustee refuses to provide an accounting?
Beneficiaries can petition the court to compel the trustee to provide an accounting. The court can also assess damages against the trustee for refusing to account and may remove the trustee for this breach of duty. This is a serious violation that courts take very seriously.
Can a trustee be removed for poor investment performance alone?
Removal requires showing that the trustee breached their fiduciary duty, not just that investments underperformed. However, a pattern of imprudent decisions can support removal. Our attorneys have successfully argued for trustee removal based on investment mismanagement patterns.
What remedies are available if we prove breach of fiduciary duty?
Courts can award damages, order restitution of trust assets, remove the trustee, compel an accounting, reduce the trustee’s compensation, or issue injunctive relief to prevent further breaches. The range of available remedies is broad and depends on the specific circumstances of your case.
How much does it cost to challenge a trustee?
Costs vary depending on the complexity of your case and whether the matter settles or goes to trial. Discuss fee arrangements during your consultation with Peck Ritchey, LLC. We offer flexible fee structures to help beneficiaries pursue their claims.
Take Action: Protect Your Trust Interests
If you believe a trustee has breached their fiduciary duties, failed to account for trust assets, delayed distributions, or made imprudent investment decisions, you have legal options. The sooner you seek counsel, the better you can protect your interests. Peck Ritchey, LLC is ready to evaluate your claim and explain your rights under Illinois law.
Call (312) 201-0900 today to schedule a consultation with our trust litigation team. Visit our about us page to learn more about our firm’s experience in trust disputes, or contact us at (312) 201-0900. We can give you the justice and compensation you need.