Can a Trustee Use Trust Funds to Defend Herself?
If a trustee is making up phony invoices to bill my special needs trust, is there any way to keep her from using the trust funds to defend herself?
Typically, a trustee may use trust funds for all trust expenses, including legal expenses. This includes hiring a lawyer to defend a trustee accused of wrongdoing. However, if the claim against the trustee is successful, a court may order the trustee to pay back any funds wrongly taken from the trust as well as the costs of defending herself. So, while the trust may be drained by legal fees during the process, it could be replenished after a successful challenge. But that will only happen if the challenge succeeds and if the trustee has the money to repay the trust. If she doesn’t, while the you might win your case, your trust fund could well be the poorer for it.