Trustee Liability for Breach of Trust

In Uzyel v. Kadisha, 116 Cal. Rptr. 3d 244 (Cal. Ct. App. 2010), a California intermediate appellate court issued a decision comprehensively interpreting Probate Code § 16440 governing remedies for breach of trust. The court held that tracing is not required as a prerequisite to disgorgement of profits; the fact that an act is consistent with the duty to invest prudently does not excuse a breach of the duty of loyalty including liability for appreciation damages; a determination of which measure of liability is appropriate under the section is reviewed for abuse of discretion; an investment loss resulting from breach of trust can be offset against a profit resulting from a breach "only if the breaches were not separate and distinct"; and an award of prejudgment interest on damages resulting from breach of trust is mandatory.

Click here to read the court decision.

Hat tip: Wills, Trust & Estates Prof Blog

Posted by Yi Song, Associate Editor, Wealth Strategies Journal.