Understanding Fiduciary Duties of Trustees and Executors in North Carolina
Trustees and executors hold legal responsibilities to manage estate or trust assets in the best interests of beneficiaries. Under North Carolina law, these duties include loyalty, impartiality, prudence, and strict compliance with the terms of the trust or will. When a trustee or executor fails to meet these obligations—by mismanaging assets or improperly applying discretionary funds—beneficiaries may pursue several remedies in the North Carolina courts.
Detailed Legal Remedies Under North Carolina Law
North Carolina statutes provide clear paths for beneficiaries to address breaches of fiduciary duty. Key options include:
- Petition for Removal of Trustee or Executor: Beneficiaries can ask the clerk of superior court to remove a trustee or personal representative who has committed a breach. Under G.S. 36C-8-801(b), the court may remove a trustee for a material breach of duty. Likewise, G.S. 28A-18-2 allows removal of an executor who mismanages estate assets or acts against beneficiaries’ interests.
G.S. 36C-8-801
G.S. 28A-18-2 - Demand for Accounting: Beneficiaries may demand a formal accounting of trust or estate transactions. Under G.S. 36C-8-404, trustees must provide regular, detailed reports of receipts, disbursements, investments, and distributions. If the executor resists, the court can compel an accounting.
G.S. 36C-8-404 - Surcharge for Breach of Duty: If accounting reveals mismanagement or unauthorized transactions, beneficiaries may seek a surcharge. A surcharge holds the fiduciary personally liable for losses caused by the breach. The court calculates the amount needed to restore the trust or estate to the value it would hold absent the breach.
G.S. 36C-8-801(b)(1) - Injunction or Declaratory Relief: Beneficiaries can ask for a court order preventing further mismanagement or clarifying the fiduciary’s duties. Courts may enter injunctions to stop unauthorized transactions and issue declarations on proper interpretation of trust terms.
G.S. 36C-8-801(b)(2) - Civil Lawsuit for Damages: If mismanagement causes significant financial loss, beneficiaries may file a civil suit against the trustee or executor. They can recover compensatory damages for losses plus interest and court costs.
- Criminal Remedies: In cases involving theft, embezzlement or conversion of trust or estate assets, beneficiaries may report the misconduct to law enforcement or the district attorney’s office. Criminal charges can include misdemeanor or felony offenses under North Carolina law.
Checklist for Beneficiaries Facing Mismanagement Issues
- Review the trust or will to confirm the fiduciary’s discretionary powers and distribution guidelines.
- Request a written accounting and copies of all transaction records.
- Document any irregular transactions, unauthorized expenditures or lack of communication.
- Consider mediation or alternative dispute resolution if parties wish to avoid litigation.
- File a petition with the clerk of superior court for removal, surcharge or injunction if issues remain unresolved.
- Gather evidence of financial losses for a possible civil suit.
- Consult an attorney to evaluate criminal referral if you suspect theft or conversion.
Take Action to Protect Your Interests
If you believe a trustee or executor is failing in their duties, don’t wait. Pierce Law Group has attorneys experienced in North Carolina probate and trust disputes. We guide you through every step—accounting demands, court petitions, civil actions, even criminal referrals. Reach out today to protect your rights and the assets you depend on.
Contact Pierce Law Group by emailing intake@piercelaw.com or call (919) 341-7055. Let us help you secure the relief you deserve.
