This article is for good lawyers representing good clients who are beneficiaries of trusts administered by bad fiduciaries represented by bad lawyers. Courts always have broad discretion to control trust funds and fiduciaries in response to purely equitable arguments—such as evidence that a trustee is misusing trust assets—but judges are often more willing to exercise their broad discretion if the equitable arguments are accompanied by more formal legal analysis.
This article gives the legal framework for why it is appropriate for a court to exercise its broad discretion over trust assets and trustees at the outset of a case and provides some ideas about three categories of relief to request: injunctions prohibiting use of funds a trustee has already stolen, injunctions limiting a trustee’s access to current trust assets, and temporary replacement of the fiduciary.
Preliminary injunctions prohibiting use of funds a trustee has already stolen. When a trustee has already stolen money that can be traced to the trustee’s possession or to the possession of an entity the trustee controls, enjoining future use of those funds would help to prevent the funds from being further misused or dissipated during the course of the litigation. If you are bringing suit to enjoin use of stolen trust funds, consider whether to do it indirectly by petitioning for the court to appoint a trustee ad litem to bring the preliminary injunction. The elements of a preliminary injunction are well-known and similar in most states, usually involving a three- or four-part test.