Disclaimer: This article is for educational purposes and is not legal advice.
Detailed Answer
In New Jersey, trustees owe a strict fiduciary duty to act in the best interests of beneficiaries. They must administer the trust prudently, avoid conflicts of interest, and account for all trust property. Misuse of trust funds can include unauthorized investments, self-dealing, or outright diversion of assets.
Under the New Jersey Uniform Trust Code, beneficiaries may take the following steps:
- Demand an Accounting: Beneficiaries can request a formal trustee accounting. The trustee must provide records and a report of all transactions. See N.J.S.A. 3B:20-2.
- Petition for Removal: If the trustee breaches duties or mismanages funds, a beneficiary can petition the Surrogate’s Court for removal. The court may remove a trustee for misconduct, lack of cooperation, or failure to act in the trust’s best interest per N.J.S.A. 3B:20-4.
- Seek a Surcharge: A court can order a surcharge (monetary penalty) against the trustee for losses resulting from misuse or breach of duty.
- Injunction or Turnover Order: Beneficiaries can seek a court order preventing further misuse and requiring the return of misapplied assets.
To begin, beneficiaries typically file a verified petition in the Surrogate’s Court in the county where the trust is administered. The court will schedule a hearing where both sides present evidence. An attorney experienced in New Jersey trust law can help navigate procedural requirements and advocate for your interests.
Helpful Hints
- Keep detailed records of all communications and transactions.
- Review trust documents carefully for distribution and removal provisions.
- Document any suspected misuse with bank statements or correspondence.
- Act promptly; courts may bar claims after undue delay.
- Consider mediation before costly litigation.