Short Answer

Yes. In North Carolina, a beneficiary may sue a trustee for breach of fiduciary duty and breach of trust, and the court can order money damages, restoration of property, removal or suspension of the trustee, and other remedies. Claims for damages are typically filed in Superior Court, while petitions to remove a trustee or compel an accounting are filed with the Clerk of Superior Court. Most breach-of-trust claims must be brought within five years of specified trigger events.

Understanding the Problem

You want to know if, under North Carolina law, you can bring a claim against a trustee for breach of fiduciary duty or mismanagement. You are a trust beneficiary asking whether you can seek court relief against the trustee now. One key fact: you believe the trustee stole all trust assets, including a large parcel of land.

Apply the Law

Under North Carolina’s trust law, trustees owe beneficiaries duties of loyalty, prudent administration, impartiality among beneficiaries, and proper recordkeeping and information sharing. A “breach of trust” occurs when a trustee violates a duty under the trust or the law. Beneficiaries may pursue remedies that include compelling performance, enjoining misconduct, restoring property, monetary surcharge, and removal. Claims for money damages are brought in Superior Court; removal and certain administrative matters are brought before the Clerk of Superior Court. A five-year outside limitation generally governs when breach-of-trust claims must be filed, measured from specific trigger events.

Key Requirements

• Standing: A beneficiary (or cotrustee) can sue a trustee to address breaches of duty and recover losses or property.
• Duty owed: The trustee must act in good faith, with loyalty to beneficiaries, and manage assets prudently and in line with the trust’s purposes.
• Breach: Self-dealing, theft, failure to safeguard assets, imprudent investments, or withholding required information can constitute breach.
• Harm and remedy: You must show loss to the trust or improper profit to the trustee; courts can order restoration, damages, and equitable relief, and can remove or suspend the trustee.
• Forum and timing: File damages claims in Superior Court; file removal/accounting petitions with the Clerk of Superior Court; most breach-of-trust claims are subject to a five-year limitation period triggered by events like trustee resignation, removal, death, beneficiary’s interest ending, or trust termination.

What the Statutes Say

• North Carolina Gen. Stat. § 36C-10-1001 (Remedies for breach of trust) – Courts may compel performance, enjoin breaches, restore property or pay money, order accounting, suspend/remove a trustee, reduce fees, and impose constructive trusts or liens.
• North Carolina Gen. Stat. § 36C-10-1005 (Limitation of action) – Most breach-of-trust claims must be filed within five years of certain trigger events.
• North Carolina Gen. Stat. § 36C-7-706 (Removal of trustee) – Sets grounds and process for removing a trustee.
• North Carolina Gen. Stat. § 36C-8-802 (Duty of loyalty) – Requires trustees to act solely in the beneficiaries’ interests; conflicted transactions are generally voidable.

Analysis

Apply the Rule to the Facts: As a beneficiary alleging the trustee stole all trust assets, the duties of loyalty and prudent administration are directly implicated. If the trustee diverted trust land or other property for personal benefit, that is a breach; the court can order tracing, a constructive trust, or return of property, and award damages. Any memorandum claiming “full trust rights” would be evaluated against the trust’s terms and the duty of loyalty; if unauthenticated or inconsistent with the trust and law, it may not shield the trustee from liability.

Process & Timing

1. Who files: Beneficiary. Where: File a civil complaint in Superior Court for damages and recovery of property; file a separate petition with the Clerk of Superior Court for removal, suspension, bond, or to compel an accounting. What: Complaint (with requests for injunction or constructive trust if appropriate); for Clerk proceedings, use the Estate Summons for Trust Proceeding (AOC-E-150). Consider a notice of lis pendens if recovering real property. When: File as soon as possible; most breach-of-trust claims have a five-year outside limitation from specified trigger events.
2. Seek interim relief where needed: move for a temporary restraining order or preliminary injunction to prevent transfers, and request an order to account or a special fiduciary to safeguard assets. Scheduling and hearing timelines vary by county.
3. Resolution: The court may enter a judgment awarding damages and equitable relief (e.g., restore property, impose a constructive trust). The Clerk may enter an order removing/suspending the trustee and appointing a successor, and may order an accounting.

Exceptions & Pitfalls

• Beneficiary consent, release, or ratification can bar claims if given with full knowledge and without improper trustee conduct.
• Exculpatory clauses may limit liability, but not for bad faith or reckless indifference; courts scrutinize these.
• Standing and venue matter: confirm you are a qualified beneficiary and file in the proper county (typically where the trust is administered or property lies).
• Third parties who dealt in good faith with the trustee may be protected; tracing and constructive trust remedies help reach transferred assets.
• Service and notice: follow civil rules; if a charitable trust is involved, the Attorney General must receive notice.

Talk to a Estate Planning Attorney

If you’re dealing with a trustee who mismanaged or took trust assets, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.