Trust mismanagement can devastate beneficiaries who depend on those assets for their financial security. I’ve seen it destroy families and drain estates that took generations to build. When a trustee fails to properly handle trust property, Illinois law provides several remedies to hold them accountable and protect what belongs to the beneficiaries.
What Constitutes Trust Mismanagement
Mismanagement looks different in every case. Sometimes it’s obvious. A trustee writes themselves checks from the trust account to pay for their vacation. They “borrow” money with no intention of paying it back. I’ve had clients discover trustees who drained six-figure trusts for personal expenses.
Other times it’s more subtle. A trustee makes well-intentioned but reckless investment decisions. They don’t keep proper records because they’re disorganized, not malicious. They ignore beneficiary requests because they’re busy or don’t understand their legal obligations. Common violations include:
- Using trust funds for personal expenses
- Selling trust property to a family member below market value
- Mixing trust money with their own bank accounts
- Missing tax deadlines
- Refusing to provide accounting when asked
- Making high-risk investments without authority
Every trustee has a fiduciary duty. That’s a legal obligation to manage trust assets prudently and always act in the best interests of beneficiaries. When they breach that duty, there are consequences.
Legal Consequences For Mismanagement
Illinois courts don’t mess around with trustee misconduct. A Chicago trust lawyer can help beneficiaries pursue various remedies depending on what happened and how bad it was. Courts have a lot of tools at their disposal.
First, they can order the trustee to personally repay losses. If a trustee made terrible investment decisions that cost the trust $50,000, that money comes out of the trustee’s own pocket. Not from what’s left in the trust. Their personal assets are on the line, including their house, their savings, everything.
Courts can also remove a trustee entirely. Sometimes that’s the only way to stop ongoing damage. I’ve represented beneficiaries where we successfully removed a trustee who was actively draining the trust, and getting them out immediately protected what remained, and if the misconduct was particularly bad? Courts can impose surcharges on top of making the trustee repay losses. Think of it as punitive damages. If a trustee engaged in self-dealing or outright fraud, they might end up paying back more than they actually took.
How Beneficiaries Can Protect Their Rights
Don’t assume your trustee is doing everything correctly. Most trustees mean well. They’re family members who said yes when someone asked them to serve, and they’re doing their best. But “doing their best” isn’t always good enough, and some trustees have no business managing trust assets.
You have rights under Illinois law. One of the most important is the right to request annual accountings. That means detailed reports showing all income, all expenses, current asset values, everything. If your trustee gives you vague summaries or refuses to provide information altogether, that’s a problem. Watch for red flags:
- Distributions that are always late
- Accounts that don’t add up or raise questions
- A trustee who won’t return your calls or emails
- Trust assets are being sold without explanation
- Investment losses that seem unreasonable
When something feels off, document it. Save every email. Keep copies of letters. If you can get your hands on bank statements or investment reports, save those too. This paper trail becomes critical if you end up in court.
The Court Process For Addressing Mismanagement
Beneficiaries can petition the probate court to investigate what’s going on. The court will review the evidence and determine whether the trustee breached their fiduciary duties. And once you raise legitimate concerns, the burden shifts. The trustee has to prove they acted reasonably and in good faith. They have to justify their decisions.
That’s actually a significant advantage. In most lawsuits, the person making accusations has to prove everything. In trust cases involving potential breaches, once you show there’s a real question about the trustee’s conduct, they have to defend themselves. Kravets Law Group handles these disputes regularly throughout Illinois. Trust litigation requires someone who understands fiduciary law and knows how to build a case that courts take seriously.
Prevention Through Proper Trust Design
Some trusts are set up with built-in protections against mismanagement. Co-trustees provide checks and balances. Major transactions require both signatures. One person can’t act alone. Trust protectors can be appointed to oversee the trustee and intervene if problems develop.
Professional trustees are another option. Instead of naming Uncle Bob, who’s great with people but terrible with money, families sometimes choose corporate trustees or trust companies. They have institutional controls, trained staff, and systems designed to prevent the kinds of mistakes individual trustees often make. Are professional trustees perfect? No. But they’ve got infrastructure that individual trustees don’t.
When To Take Action
Timing matters in these cases. If you wait too long, evidence disappears. Memories fade. Money gets spent that can’t be recovered. I’ve had potential clients come to me years after they first suspected problems, and by then, the trust was empty, and the trustee had spent everything. Early intervention prevents small problems from becoming catastrophic. A Chicago trust lawyer can review your trust documents, assess whether mismanagement has actually occurred, and explain what options you have under Illinois law. You’re not powerless as a beneficiary. If your trustee isn’t meeting their obligations, legal remedies exist to protect your interests and hold them accountable. Sometimes just having a lawyer send a letter is enough to get a trustee back on track. Other times, you need court intervention to remove them entirely, but you have to act while there’s still something left to protect. Contact us today.