Steps to Challenge a Trustee for Misusing Trust Funds in Iowa
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult an attorney for guidance specific to your situation.
Under the Iowa Uniform Trust Code (Chapter 633A), trustees must administer trust assets in the best interests of the beneficiaries. When a trustee misuses trust funds, beneficiaries can follow these steps to hold the trustee accountable:
1. Identify the Breach of Fiduciary Duty
Trustees owe strict duties of loyalty, impartiality, and prudence. Misuse of trust funds may include:
- Using trust assets for personal benefit.
- Making unauthorized distributions.
- Failing to follow the terms of the trust.
2. Gather and Preserve Evidence
Collect trust agreements, bank statements, ledgers, emails, and correspondence. Create a detailed timeline of questionable transactions. Store originals securely to prevent tampering.
3. Request a Formal Accounting
Beneficiaries have the right to request an accounting of all trust activity. If the trustee refuses or provides incomplete records, document the refusal in writing. A court can then compel the trustee to produce a full accounting.
4. File a Petition in Court
File a petition in the district court where the trust is administered. Under Iowa Code §633A.1701 (Iowa Code §633A.1701), the petition should outline the alleged breaches and specify the relief sought.
5. Seek Court Remedies
The court may impose remedies under Iowa Code §633A.1306 (Iowa Code §633A.1306):
- Removal of the trustee.
- Surcharge for losses caused by the breach of trust.
- Restitution of misused funds to the trust.
- Recovery of attorney fees and court costs.
Helpful Hints
- Maintain an organized file of all trust documents and communications.
- Send written requests for information and keep copies to build your record.
- Consult a qualified trust attorney early to assess your rights and deadlines.
- Act promptly—statutory deadlines may apply once you discover misuse.
- Consider mediation or alternative dispute resolution to resolve conflicts more efficiently.